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Pound Euro (GBP/EUR) Exchange Rate Rises on Sliding German Consumer Confidence

August 10, 2021 - Written by John Cameron

GBP/EUR Exchange Rate Edges Higher as German and Eurozone Economic Sentiment Shrinks

The Pound Euro (GBP/EUR) exchange rate rose by 0.2% today following the release of the latest Eurozone ZEW survey of economic sentiment for August, which fell below forecasts and contraction from 61.2 to 42.7. The pairing is currently fluctuating around €1.18.

Today also saw the release of the German ZEW survey of economic sentiment, which showed a further slide for a third month in a row,, shrinking from 63.3 in July to 40.4.

Achim Wambach, president of the ZEW Leibniz Centre for European Economic Research, commented on the data:

‘Expectations have declined for the third time in a row. This points to increasing risks for the German economy, such as from a possible fourth Covid-19 wave starting in fall or a slowdown in growth in China.’

As a result, EUR investors have become more concerned about the outlook for the German economy, which is the largest in the Eurozone.

The GBP/EUR exchange rose to an 18-month high as a result, with investors steering clear of the single currency as the outlook for the Eurozone economy becomes more uncertain.

Pound (GBP) Exchange Rate Edges Higher as UK Retail Sales Rise in July

The Pound (GBP) rose against the Euro (EUR) following the release of the latest British Retail Consortium (BRC) retail data for July, which rose but remained below pre-pandemic levels last month.

Helen Dickinson, chief executive of the BRC, commented on the data:

‘July continued to see strong sales, although growth has started to slow.

‘The lifting of restrictions did not bring the anticipated in-store boost, with the wet weather leaving consumers reluctant to visit shopping destinations.’

However, with the UK Government due to further ease Covid-19 travel restrictions, some Pound traders have become more confident about the economic outlook.

In absence of any economic data for much of this week, GBP is being buoyed by confidence in the UK’s coronavirus situation, which is showing some encouraging signs of easing, albeit with a slight rise of daily cases over the course of last week.

GBP/EUR Exchange Rate Outlook: German Inflation Data in the Spotlight

Euro (EUR) traders will be awaiting tomorrow’s publication of the final German harmonised index of consumer prices for July.

Any improvement in the outlook for the Eurozone’s biggest economy would be EUR-positive.

However, if there’s an indication that Eurozone economic growth is slowing down, then we could see the EUR/GBP continue to fall.

Pound (GBP) traders will eye the UK’s Covid-19 developments. A fall in daily coronavirus infections would see the GBP/EUR exchange rate edge higher.

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