The GBP EUR exchange rate mounted a recovery on Thursday morning as UK retail sales rose faster than expected in February – but how is the Pound likely to perform ahead of the weekend?
The Confederation of British Industry’s (CBI) ‘distributive trades’ survey reported that sales were up in 40% of retailers this month compared with the same period last year, when 31% reported a drop.
The Pound rose against the Euro as sales figures jumped from -8 to 9 in February, easily outpacing expectations that it would only rise to 5.
However it was not all sunshine and rainbows for retailers as most do not expect this trend to persist in 2017 as rising costs and the uncertainty of Brexit causes them to forecast a far gloomier year ahead.
Howard Archer, chief UK economist at IHS Global Insight said;
‘The squeeze on consumers looks set to deepen markedly over the coming months as inflation likely heads towards 3% and pay growth is limited.’
Meanwhile the Euro continued to struggle under the pressure of rising political uncertainty across Europe as analysts at Deutsche Bank warns that the Eurozone faces a crisis if Marine Le Pen is victorious in the French elections.
Le Pen hopes to lead France out of the EU if she wins in May as she plans to emulate Britain’s decision to revoke its membership last year.
However Deutsche Bank warns that a similarly planned ‘Frexit’ could be catastrophic for the single currency as France’s economy is far closer tied to the Eurozone than the UK, with shared assets totalling around €46 trillion the bank warned that such a decision would ‘cascade through the financial system, with unprecedented implications for global risk’, while also predicting that the fallout could be worse that the collapse of the Lehman Brothers that triggered the 2008 financial crisis.
Looking ahead to later today a predicted drop in UK Mortgage Approvals in January is likely to weigh on GBP EUR as the uncertainty of Brexit makes buyers more wary as the government prepares to trigger Article 50 by the end of March.
Meanwhile, the Euro may be able to rally if the recent uptrend in French Consumer Confidence continues in February after it reached a nine year high of 100 at the start of the year.
Current Interbank Exchange Rates
At the time of writing the GBP EUR exchange rate was trending around 1.18 and the EUR GBP exchange rate was trending around 0.84.
Comments are closed.