Pound Euro (GBP/EUR) Exchange Rate Steady as Eurozone Retail Sales Slow

Modified: Friday, 4 May 2018 11:05 BST - Written by John Cameron

STORY LINK Pound Euro (GBP/EUR) Exchange Rate Steady as Eurozone Retail Sales Slow

The Pound Euro (GBP/EUR) exchange rate looks to have stabilised this morning as the pairing was prevented from falling any further in the wake of some disappointing retail sales figures from the Eurozone.

Euro (EUR) Exchange Rate Muted as Eurozone Retail Sales Disappoint

The Euro (EUR) is struggling to apply any further pressure to the Pound (GBP) this morning, as Eurozone retail sales growth was shown to have slowed sharply in March.

According to data published by European Statistics agency, Eurostat, retail sales rose by just 0.1% in March, down from a revised expansion of 0.3% the previous month and missing expectations that sales growth would have rallied to 0.5%.

However it was the annualised figures that real weighed on the Euro exchange rate as year-on-year sales growth was shown to have plummeted from 1.8% to just 0.8% in March.

Eurostat reported that the slowdown in sales appeared to be mainly down to a declining demand for non-food items, particularly in clothing and pharmaceutical goods, while sales were prevented from remaining flat thanks to a slight uptick in food and drink sales.

The decline in sales growth helps to further underpin the Eurozone’s loss in momentum so far in 2018 and will do little to persuade the European Central Bank (ECB) to consider raising interest rates anytime in the foreseeable future.

Pound (GBP) Exchange Rate Steady as UK Car Sales Rise for First Time in a Year

The Pound (GBP) meanwhile is showing a little more resilience this morning as the beleaguered currency is buoyed by a welcome rise in UK car sales.

The Society of Motor Manufacturers and Traders reports that new car registrations rose by 10.4% in April compared with the same point in 2017, the first positive rise in sales for over a year.

However analysts warned about becoming too excited by the rise in sales as the figures were likely padded against last year’s figures by as buyers rushed to avoid facing the new vehicle excise duty (VED) rules implemented in April 2017.
Ian Gilmartin, head of retail at Barclays corporate banking said:

‘The uptick in new car sales will be welcome news for many sellers, but we can’t have it both ways – just as we partly attributed last month’s poor result to an unfair comparison to an unusually strong March 2017 ahead of the tax changes, similarly April 2017 was relatively weaker after the VED increase came into force, which flatters today’s numbers.

With the exception of last year, it is still the weakest April since 2013 but after a full year of declines, the industry will cheer a sales increase in whatever way it’s achieved.’

GBP/EUR Exchange Rate Forecast: BoE Rate Decision in Focus

Looking ahead to next week’s session the main source of movement in the GBP/EUR exchange rate will undoubtedly be on the Bank of England’s latest policy meeting on Thursday.

A run of soft UK data and some dovish remarks from BoE Governor, Mark Carney means the majority of economists no longer anticipate any alterations to the bank’s monetary policy this month, something which is likely to leave pressure on the Pound (GBP).

However with the BoE still expected to raise interest rates at least once this year, markets will be closely watching for any hints from the Monetary Policy Committee (MPC) for any hints on when markets may expected this to take place.

Meanwhile the most notable release from the Eurozone next week is likely to be Germany’s industrial production figures, with the Euro (EUR) expected to strengthen if German factory output rebounded in March as forecast.

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TAGS: Pound Euro Forecasts