GBP EUR Exchange Rates Climb as Eurozone Data Proves Mixed

Modified: Wednesday, 8 November 2017 08:05 BST - Written by David Woodsmith

STORY LINK GBP EUR Exchange Rates Climb as Eurozone Data Proves Mixed

The Pound continued its climb against the Euro this morning as markets reacted to a run of mixed Eurozone data releases, including various poor Markit retail PMI readings, a disappointing German industrial production figure, a below forecast German construction PMI and a positive leap in Eurozone retail sales.

Eurozone Data Proves Mixed, GBP Exchange Rates Capitalise

Retail sales in the Eurozone smashed expectations in September by rising 3.7% year-on-year, up from the previous period’s 2.3% gain and the market forecast of 2.7%. This marked the sharpest recorded increase in retail trade for the bloc since July 2015, with a surge in the sales of clothes, furniture and electrical goods all bolstering the figure.

Other news from the bloc was less positive, however, with industrial production in Germany slipping month-on-month by -1.6%, down from August’s 2.6% gain and below the market forecast of 0.8%.

This marked the largest decline in industrial output since December of last year, with production falling for energy, capital goods, intermediate goods and consumer goods.

Beyond this, the IHS Markit German construction PMI slipped to 53.3 in October, slightly down from the previous month’s 53.4 and signalling a nine-month low.

It should be noted, however, that any figure above 50 still demonstrates expansion.

Ultimately, the bad negated the good for Euro data today, leaving the Pound free to continue climbing ahead.

Theresa May Assuages Business Anxiety – GBP Exchange Rates Bolstered

UK Prime Minister Theresa May attempted to reassure business leaders on Monday that she understands and appreciates the call for clarity on the future of the UK’s relationship with the EU post-Brexit.

Speaking at a conference of the CBI lobby group in London, May asserted that the UK needed to regard the future as ‘rational optimists’, and that with the correct economic foundations, a balanced approach to public spending and the best Brexit deal, Britain could thrive.

Notably, May asserted that she remains dedicated to a strictly time-limited implementation period, and that she is aware of how important it is for businesses and various industries that a cliff-edge is avoided. May stated:

‘I have made clear that a strictly time-limited implementation period will be crucial to our future success. I know how important it is for business and industry not to face a cliff-edge and to have the time it needs to plan and prepare for the new arrangements’.

Whilst such a statement might not have historically resulted in much interest from the markets, investor attention in regards to the nuances of the Brexit negotiation process has been amplified somewhat due to the sparse UK data calendar this week.

The Pound maintained its climb as a result.

GBP EUR Forecast: UK Trade Balance and Production Data Ahead

The Pound Euro exchange rate could become increasingly volatile into the week’s end, depending on two primary factors, the first being the resumption of Brexit negotiations – due to begin again on Thursday and the second being Friday’s run of important UK data releases.

Theresa May may have quelled some worries at her speech on Monday, but markets may quickly grow tired of platitudes – eager to hear instead about some demonstrable progress.

If progress in this form isn’t made before the week’s end, then markets may grow increasingly apprehensive about the prospect that no deal will be effectively realised before the March 2019 deadline. This could weigh on the Pound.

On the data front, the Pound may find some purchase however, with the UK’s trade deficit forecast to have shrunk from -£5,626 to -£4,600 in September, whilst industrial production is expected to climb from 1.6% to 1.9%.

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