GBP/EUR Exchange Rate Weakened by Lacklustre UK Household Finances
The Pound Euro (GBP/EUR) exchange rate is edging down this morning as the UK’s latest house finance figures fail to inspire confidence in Sterling.
At the time of writing the Pound Euro GBP/EUR exchange rate is trading slightly below its opening levels this morning, but still remains up so far this week.
Pound (GBP) Exchange Rates Dip on Mixed Household Finances
The Pound is on the defensive this morning as the latest UK data painted a mixed picture of the state of UK household finances.
According to data published by UK Finance, domestic mortgage approvals were up 0.7% in August from the same month last year, while credit card spending was up 7.6% against a year earlier.
Analysts were unconvinced by the figures however, warning that household continued to come under pressure due to inflation.
Commenting on the data, Peter Tyler, Director at UK Finance said:
‘Growth in card spending remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment.
‘However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.’
Euro (EUR) Stalls as Draghi Comments Played Down by ECB
Meanwhile, while the Euro (EUR) is edging higher against the Pound (GBP) this morning, it remains range bound against most its other peers after the European Central Bank (ECB) saw to play down Mario Draghi’s recent comments on inflation.
The ECB president remarked on a ‘relatively vigorous’ pick up in Eurozone inflation earlier in the week, something many analysts interpreted as a signal the ECB could look to raise interest rates a little earlier than previously expected in 2019.
However the ECB’s chief economist Peter Praet looked to play down Draghi’s comments on Tuesday, stating the comments were in line with the bank’s outlook.
GBP/EUR Exchange Rate Forecast: Will Rising Eurozone Inflation Bolster the Euro?
Looking ahead to the very end of this week’s session, the main catalyst for movement in the Pound Euro (GBP/EUR) exchange rate is likely to be the release of the Eurozone’s latest Consumer Price Index (CPI) flash on Friday.
Economists forecast that the CPI figures will reveal both headline and underlying inflation ticked up this month, potentially lifting the Euro if it helps to strengthen the recent ECB rate speculation.
Meanwhile, Friday will also bring the release of the UK’s final GDP reading for the second quarter, with Sterling potentially showing more resilience should they confirm the UK economy expanded by a more robust 0.4% in the three months to June.
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