GBP/EUR Exchange Rate Stable as Germany Factory’s Face Drop in Orders
The Pound Euro (GBP/EUR) exchange rate is trading narrowly this morning as markets react to Germany’s latest factory orders data.
At the time of writing GBP/EUR is largely unmoved from its opening levels, although this leaves the pairing close to a one-week low.
Euro (EUR) Exchange Rate as Outlook for Germany’s Manufacturing Sector Looks Gloomy
The Euro (EUR) exchange rate surged higher on Wednesday following reports the European Central Bank (ECB) is set to begin discussing the winding down of its generous quantitative easing programme.
However the single currency is struggling to build on these gains this morning following a surprise dip in Germany’s latest factory order figures.
Data from Germany’s Federal Statistics Office revealed domestic orders contracted a further 2.5% April, following on from a 1.1% drop in demand in March.
This is the fourth consecutive month in which orders have fallen, making it increasingly difficult to attribute the slide to temporary factors.
Analysts are also expressing concerns that this may be further evidence that the Eurozone’s slowdown at start of 2018 may have been more dramatic than thought.
Carsten Brzeski, chief economist at ING Germany said:
‘Normally, an increase in new orders after three consecutive drops looks as safe a bet as predicting tomorrow’s sunrise. However, it seems that today the sun did not rise for German industry.
Evidence is piling up that the soft patch at the start of the year has been more serious than previously thought.’
GBP/EUR Exchange Rate Forecast: Slowing German Industrial Production to Pressure the Euro?
Looking ahead the GBP/EUR exchange rate may rebound at the tail end of this week’s session as Germany publishes its latest industrial production figures.
Economists currently forecast this data will reveal factory output growth slowed from 1% to 0.3% in April, however given the fall in today’s order figures, this slowdown could prove to be sharper than initially expected, likely pressuring the Euro (EUR).
Meanwhile GBP investors are bracing for a bumper session of data next week, with the Pound (GBP) exchange rate potentially jumping if inflation or wage growth are shown to have risen over the past couple of months.
An uptick in either may help to bolster the chances of the Bank of England (BoE) raising interest rates this year, something which would also reflect well on Sterling.
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