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Euro to Pound Outlook - EUR/GBP Exchange Rate Softens; Eurozone Recovery Flat Lining

August 22, 2014 - Written by John Cameron

Today finds the Euro to Pound exchange rate end the trading week lower as the Single Currency declined on the Jackson Hole symposium, which proved highly influential for the currency market as a whole. The EUR GBP exchange rate currently stands at 0.79932 (23/08/2014)

The conference will enable currency giants such as Chairwoman for the Federal Reserve, Janet Yellen, and President for the European Central Bank, Mario Draghi, to discuss global economics.

The market movement thus far has seen the Pound to Euro exchange rate rise by 0.07%, with the prospect of more to follow dependent on the outcome of today. The Eurozone produced poor Consumer Confidence figures yesterday which saw a tumble further than economists had expected, falling to -10.0, suggesting consumer sentiment in the Eurozone nations isn’t fairing well.

Eurozone Figures of Late Disappoint Causing the Euro Exchange Rate to Soften

Besides the poor consumer confidence data on Thursday, other figures for the Eurozone have flopped substantially, lending to the view that the Eurozone recovery is flat lining. The Eurozone, did however see some positivity on Thursday, after some German PMI figures proved favourable, however French and Eurozone figures failed to impress. Professor of Economics Richard Portes commented: ‘The second quarter data are not in. Most of the optimists are finally silent. The three largest Eurozone economies all failed to register growth.’

Draghi is expected to be forced to resort to his last feasible tool—Quantitative Easing—in an attempt to rescue the Eurozone from its low inflation hovering near zero, by printing large amounts of money to purchase excessive amounts of bonds. Expert in European Currency Myles Bradshaw stated: ‘The odds of QE in the near-term are relatively low. The market is thinking more about what will happen in 2015.’

Pound Fails to Contest Against Other Majors Following Poor Data

The Retail Sales figures released this week for the UK have shown that July’s sales are the most lethargic since November 2013. The UK’s recovery is encouraged by consumer spending, which makes Thursday’s data even more disappointing; Retail Sales figures grew by only 2.6% in July, a far cry from the 3.1% economists had forecast and June’s 3.4%. Next week however looks to be an extremely quiet week for the Pound with only Friday seeing the release of the UK Consumer Confidence Survey.

The Eurozone however will have plenty of opportunity to shine, or perhaps more likely, disappoint. The Eurozone IFO Business Climate, Current Assessment and Expectations figures are all scheduled for release on Monday, whilst Wednesday will prove an interesting day as German Consumer Confidence figures are published. Thursday however will see the highly influential German Unemployment Rate and Unemployment Change figures released.

For now the Pound Euro exchange rate is awaiting the statements Draghi makes today, which may continue to be reassuring, but unless he places additional measures in place for the Eurozone recovery, the 18 economy structure may continue to stagnate.

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