June 8, 2021 - Written by John Cameron
STORY LINK Pound Euro Exchange Rate Dips as UK Government Remains ‘Open’ About Easing Lockdown in June
GBP/EUR Exchange Rate Slips Despite Strong UK Retail Data
The Pound Euro exchange rate slipped by -0.2% today as a result of this week’s comments from UK Health Secretary Matt Hancock, who said that the Government was ‘open’ about delaying the easing lockdown restrictions on 21 June. The pairing is currently fluctuating around €1.15.
Sterling fell against some of its peers today as rising Covid-19 infections threaten to see the Government push back its goal to finally ease lockdown measures this month.
UK Covid-19 surge testing has also been extended across Greater Manchester and Lancashire to track and curb the spread of the Delta variant, which has been deemed 40% more transmissible.
In UK retail data, last night saw the release of the latest British Retail Consortium’s (BRC) data for May’s retail sales, which jumped by 23.7%.
Helen Dickinson, chief executive of the British Retail Consortium, commented on the report:
‘The rain in May failed to dampen consumer demand. Clothing retailers were the biggest beneficiaries of pent-up demand, clocking up increases of over 100% as an easing of restrictions saw stores reopen and social events social come back on the agenda. Consumers also splurged on new jewellery, footwear and home accessories.’
In the absence of notable UK economic data today, the GBP/EUR exchange rate has struggled on growing concerns that the Government could delay the easing of lockdowns later this month.
Euro (EUR) Exchange Rate Edges Higher as Eurostat Upgrades Eurozone Growth Forecast
The Euro (EUR) rose today following news from the statistics body Eurostat, which revised up its estimate GDP for the first quarter of this month.
Paul Hannon, a reporter for The Wall Street Journal, explains:
‘Eurostat has halved its estimate of the decline in GDP during the first quarter, although the figures confirm the eurozone was in recession. But of the big four, only France experienced a recession, with Italy growing in 1Q, and Germany and Spain avoiding a 4Q contraction.'
However, today also saw the release of the German factory production data for April, which fell below forecasts to -1%.
As a result, EUR investors have become more worried about the outlook for the Eurozone’s largest economy.
June’s ZEW survey of German economic sentiment, however, remained strong at 79.8.
ZEW President Achim Wambach explained the fall below consensus:
‘The economic recovery is progressing. The decline in expectations is probably largely due to the considerably better assessment of the economic situation, which is now back at pre-crisis levels.’
GBP/EUR Exchange Rate Forecast: Could the UK Government Delay the Easing of Lockdown Measures?
Euro (EUR) investors will await tomorrow’s release of the latest German trade balance report for April.
Any indications of a strong economic recovery for the Eurozone’s largest economy would be EUR-positive.
Pound (GBP) traders will be looking ahead to Thursday’s speech from the Bank of England’s (BoE) Chief Economist, Andy Haldane.
If the BoE is more optimistic about the outlook for the UK economy, then the Pound Euro exchange rate would head higher.
However, if the UK Government appears more sympathetic to delaying the easing of lockdown measures on 21 June, then Sterling would suffer.
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TAGS: Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts