The Euro to GBP exchange rate was fluctuating around the 0.7990 pence mark during the first half of the European session as investors responded to a very mixed bag of economic reports from Europe.
First thing this morning the German import price index was shown to have stagnated in May, month-on-month, after declining by 0.3% in April. On the year the nation’s import price index came in at -2.1% rather than the -2.2% expected.
Meanwhile, French growth data confirmed that the Eurozone’s second largest economy stagnated in the first quarter of the year, as initially estimated. The nation’s annualised quarter-on-quarter growth figure was negatively revised from 0.8% to 0.7%.
The Euro to GBP exchange rate experienced modest movement in response to these reports and was also affected by the UK’s consumer confidence and Hometrack house price survey.
The UK GfK Consumer Confidence gauge edged up slightly from 0 to 1 in June, a better result but shy of the forecast reading of 2.
The Hometrack survey revealed that the pace of house price growth in the UK slowed to a five-month low in June, with prices climbing by 0.3% month-on-month following a jump of 0.5% in May.
As the day progressed the Euro to Pound exchange rate experienced additional movement as a result of below-forecast confidence measures for the Eurozone.
Figures compiled by the European Commission showed that Economic Sentiment in the Eurozone dropped to 102.0 in June, shedding 0.6 points and returning to the level recorded in April as people responded to the European Central Bank’s decision to introduce additional stimulus and mixed domestic fundamentals.
The report did have some positive comments to make, such as; ‘Retail trade confidence remained broadly unchanged, while services confidence booked a slight improvement. The weakening industry confidence was caused by managers’ more careful views on expected production, the current level of overall order books and, less so, the stocks of finished products.’
The Commission also released other disappointing figures for the Eurozone, including the region’s Consumer Confidence measure (which fell from -7.4 to -8) the Business Climate Indicator (which dropped from 0.37 to 0.2) and the currency bloc’s Industrial Confidence gauge (which slid from -3.1 to -4). The only bright spot came in the form of the Eurozone’s Services Confidence report.
That particular index advanced from 3.8 to 4 in June, as expected.
UK final Gross Domestic Product data was published this morning and confirmed that the British economy expanded by 0.8% in the first quarter of the year. This was in line with previous estimates and the UK’s best quarterly growth for several years.
Later today further Euro to GBP exchange rate movement could be occasioned by the release of German inflation figures for June.
The preliminary reports are expected to show that Germany’s Consumer Price Index climbed by 0.2% in June month-on-month and was up 1.0% on the year – an improvement on May’s figures. As the threat of deflation is one of the European Central Bank’s major concerns, a strong result would be well received and the Euro to GBP exchange rate could recoup losses.
UPDATED 07:10 GMT 30, June 2014
German Retail Sales Stumble
Although the Euro to GBP exchange rate managed to keep the Pound trending below psychological resistance of 1.25, the common currency did falter slightly following the publication of sightly disappointing retail sales figures for Germany.
Retail sales data for the Eurozone’s largest economy showed a month-on-month decline of -0.6% on May.
A month-on-month increase of 0.8% had been expected.
On the year, sales were up 1.9% – down from annual growth of 3.2% in April but over double the 0.8% increase anticipated.
With the Eurozone’s Consumer Price Index still to be released later today, considerable additional EUro to GBP exchange rate movement could occur.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7997,
Euro,,US Dollar,1.3614,
Euro,,Canadian Dollar,1.4547,
Euro,,Australian Dollar,1.4449,
Euro,,New Zealand Dollar,1.5559,
US Dollar,,Euro ,0.7345,
Pound Sterling,,Euro,1.2505,
Canadian Dollar,,Euro,0.6877,
Australian Dollar,,Euro,0.6921,
New Zealand Dollar,,Euro,0.6433,
[/table]
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