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Pound Euro Exchange Rate Steady as German Factory Orders Fall Below Forecasts in April

June 7, 2021 - Written by John Cameron

GBP/EUR Exchange Rate Rangebound on ‘Soft’ German Factory Data

The Pound Euro exchange rate held steady today following the publication of the latest Germany factory orders for April, which fell below forecasts at -0.2%. The pairing is currently fluctuating around €1.16.

The Euro (EUR) suffered from the unexpected fall in Germany’s factory orders today as concerns about the outlook for the Eurozone’s largest economy continue to grow.

Analysts at Pantheon Macroeconomics commented on the data:

‘This is soft, but better than we feared, especially given the upward revision to the March number.

‘Looking ahead, the scene is set for a decent gain through Q2 as a whole. Even if new orders were unchanged through the rest of the quarter, they would still increase by 2.9%.
This, in turn, however points to relative soft month-to-month data in the next few months.’

Eurozone construction continues to grow, however, restoring confidence in the bloc’s economic outlook as key nations throughout Europe ease lockdown restrictions.

Usamah Bhatti, economist at IHS Markit, commented on the latest Eurozone construction data, which rose to 50.3 last month.

‘The upturn in the eurozone construction sector continued in May, as businesses reported a slightly stronger expansion in activity. At the same time, new order growth resumed at a solid pace that was the strongest since February 2019.’

Today also saw the release of the Eurzone’s latest Sentix investor confidence for June. The figure beat forecasts and rose to 28.1.

Pound (GBP) Exchange Rate Steady as UK Covid-19 Infections Continue to Rise

The Pound (GBP) held steady against its peers today as UK Covid-19 infections continue to rise, sparking concerns that the full lifting of lockdown measures could be delayed on 21 June.

Data collected on Friday revealed that daily cases had risen by 2,101 versus last week, while daily deaths have remained in single figures, down by -2 compared to the previous week.

UK Health Minister Matt Hancock has dropped hints that the further easing of lockdown measures could be delayed.

Ravi Gupta, a professor of clinical microbiology at University of Cambridge, also commented:

‘I think that to go completely back to normal may not be in everyone’s best interests.

‘The views of scientists such as myself and others reflects the fact that we want this to be the last lockdown that we ever go into, and we do not want to go into a reverse situation which would be much more damaging to the economy, people’s businesses and long-term welfare.’

In UK economic news, today saw the release of the Halifax house prices for May. The figure rose to record highs at 1.3% month-on-month.

IWG commented on the data:

‘Accordingly, this will delay the anticipated recovery in our business and, given the operational gearing of the group, is expected to have a significant impact on the group’s results for 2021.’

Pound Euro Exchange Rate Forecast: German Economic Sentiment Gauge in Focus

Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK retail sales report for May.

Any improvement in UK retail sales would buoy the GBP/EUR exchange rate.

Euro (EUR) traders will eye tomorrow’s release of the latest Eurozone GDP data for the first quarter. If the figure is revised upwardly, then the Euro would head higher against Sterling.

Tomorrow will also see the release of Germany’s ZEW survey of economic sentiment for June.

The GBP/EUR exchange rate could suffer tomorrow if the outlook for the Eurozone’s largest economy continues to improve.

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