The Pound to Euro (GBP/EUR) exchange rate weakened on Thursday after UK retail sales data came in below economist forecasts and the Euro was supported by data that showed that the Eurozone saw an uptick in business activity in October.
Sterling also declined for third consecutive session against the US Dollar (USD), its longest losing streak in three weeks after a report by the Office for National Statistics showed that UK retail sales declined more than forecast in September.
According to the data, retail sales declined by 0.3% last month, raising concerns that the UK economy is slowing. Economists had been expecting sales to fall by just 0.1% after sales in August increased by 0.4%. On an annual basis retail sales rose by 2.7%, missing expectations for a figure of 2.8% and marked a slowdown from the rise of 3.7% recorded in August.
Core retail sales, which exclude car sales, fell by 0.3%, worse than forecasts for a decline of 0.2%.
Also weighing upon the Pound was data released by the British Bankers Association, which showed that Mortgage activity fell in September. The report showed that there were 39,271 approvals for home purchases.
Eurozone Data Supports Euro
The Euro was able to strengthen against the Pound and other major peers after data showed that manufacturing output in the Eurozone expanded at its fastest pace in three months.
According to the data compiled by Markit the regions manufacturing purchasing managers index (PMI) increased to a reading of 50.7 in October, better than the 50.3 figure recorded in September and was better than economist expectations for the index to fall to 49.9.
In a PMI report, any figure above 50 indicates expansion whilst one below indicates contraction.
The manufacturing PMI of Germany also improved but data out of France continues to disappoint.
Germany’s manufacturing PMI rose to 51.8 from the previous final reading of 49.9 last month. Economists had been expecting a drop to 49.5.
France meanwhile saw business activity fall to an eight month low as its manufacturing sector shrank at a faster than expected rate and its service sector continued to shrink.
“The survey data are broadly consistent with GDP rising 0.25% in the third quarter, but unless demand picks up soon, growth could weaken again in the fourth quarter and deflationary forces could intensify,” Chris Williamson, chief economist at Markit said.
Sterling could regain ground against the Euro if Friday’s UK GDP growth data comes in positively. A weaker figure however and we can expect the Pound to fall further against the Euro and other major peers.
UPDATE
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2680.
In spite of positive data out of the 18-nation currency bloc’s most powerful nation, the GBP/EUR exchange rate has actually advanced fractionally since markets opened on Friday. German Consumer Confidence was forecast to drop from 8.4 to 8, but the actual result advanced to 8.5.
The key British growth data, due for publication later on Friday morning, will cause volatility for the Pound. Third-quarter Gross Domestic Product is expected to drop to 0.7% on a quarterly basis, having hit 0.9% in the previous quarter. On a yearly basis GDP is expected to show 3.0% growth having grown by 3.2% this time last year.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2662 ,
Euro,, Pound Sterling,0.7904 ,
Euro,,Australian Dollar,1.4413 ,
Euro,,Canadian Dollar,1.4223 ,
Pound Sterling,,Euro,1.2648 ,
US Dollar,,Euro,0.7897 ,
[/table]
