Pound to Euro Exchange Rate Benefits from Hopes of Resilience in Britain’s Economy
While the Pound Sterling to Euro (GBP/EUR) exchange rate ultimately failed to sustain any gains last week amid Euro (EUR) resilience, the Pound (GBP) saw a more solid rise in demand this morning in reaction to some impressive UK data.
Last week saw GBP/EUR climb from the level of 1.1706 to a fortnight high of 1.1853, before tumbling again in the second half of the week. GBP/EUR ultimately closed the week just above its opening levels, near the level of 1.1712.
At the time of writing on Monday, GBP/EUR is climbing again due to the expectation-beating UK data, and currently trends in the region of 1.1745.
Some key Eurozone data has beaten expectations today as well, but due to highly concerning UK data last week this morning’s services report was ultimately more surprising.
Pound (GBP) Exchange Rates Find Support as UK Services Sector Stabilises
Today’s UK services PMI report from Markit beat expectations, and is helping the Pound to strengthen.
Last week’s manufacturing and construction PMIs contracted even more deeply than forecast, worsening concerns about how Britain’s economy was handling political and Brexit uncertainty.
However, today’s services data printed at a stagnant 50.0, avoiding the expected contraction of 49.2.
Analysts believe the data indicates that Britain’s economy is stabilising since the decisive results of December’s General Election, following months of political uncertainty last year.
The data showed workloads rising and the highest level of new orders since July 2019.
Euro (EUR) Exchange Rates Limp despite Forecast-Beating Data
This morning’s most notable Eurozone ecostats beat forecasts in many major prints. German retail sales were well above expectations in November, and Germany’s final December composite PMI printed growth rather than the expected contraction.
Overall, the Eurozone’s final December PMIs beat projections with services at 52.8 and composite data at 50.9.
However, while these stats were better than expected they did little to change the Eurozone’s economic outlook.
Overall the data indicates a slow end to 2019 for the Eurozone, and signs of recovery remain limited.
Still, the Euro has been able to hold its ground against Sterling a little better than other major currencies, due to continued weakness in its biggest rival the US Dollar (USD).
Pound to Euro Exchange Rate Outlook Awaits Further Key Data
This week will be quiet for Britain’s economic calendar, with today’s services report being the only data worthy of note aside from Wednesday’s less influential labour productivity results.
However, Pound investors will continue to look for reasons to become more optimistic about Britain’s economic and Brexit outlooks.
Sterling could remain supported throughout the week on hopes that Brexit uncertainty will soften and help Britain to enjoy more stable economic activity this year.
Euro investors, on the other hand, are anticipating slews of influential Eurozone data due throughout this week.
Key Eurozone inflation and retail stats are due tomorrow, with German factory orders and Eurozone confidence data on Wednesday.
If these stats continue to come in higher than forecast, hopes of a Eurozone economic recovery will persist or rise, which could bolster the Euro outlook.
This would make investors more willing to sell the Pound to Euro (GBP/EUR) exchange rate again.
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