The Pound Sterling to Euro (GBP/EUR) exchange rate ticked higher as Tuesday’s session progressed as the latest UK Construction PMI data came in positively.
The Markit/CIPS UK construction purchasing managers’ index (PMI) rose a full point to 60.1, defying expectations for a slight fall to 59.0 and reaching its highest level since October.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.375
Earlier The Pound Sterling to Euro (GBP/EUR) exchange rate softened on Tuesday as German retail sales data smashed economist forecasts.
Sterling came under pressure early in the session as a monthly report compiled by Citi/YouGov showed that Britons expectations for inflation over the next year fell to the lowest level in more than six years last month.
Expectations slipped to 1% in February, the lowest level seen since the tail end of 2008. With inflation at record low levels, the Bank of England is not expected to raise interest rates until prices begin rise.
The Euro firmed against a number of peers as German retail sales data smashed forecasts. According to the German National Statistics Office, retail sales surged by 2.9% on a month-on-month basis and by 5.3% on an annual basis. Economists had been forecasting for monthly sales to rise by just 0.4% and annual sales to rise by 2.7%.
‘Cheap oil, healthy income gains, low interest rates and fading risks combined to make a very strong start to the year for German retailers. Private consumption looks set to be a major growth driver in 2015 and, at this rate, would put a severe upside risk to our forecast of Gross Domestic Product (GDP) growth of merely 0.3% quarter on quarter in the first quarter,’ Christian Schulz, senior economist at Berenberg Bank.
The data also supports data released last week, which showed that German consumer morale surged to its highest level in more than 13 years as shoppers enjoyed the benefits provided, by high employment and solid wage growth.
Eurozone Break up Bets Rise
Further gains for the Euro were held in check as a report showed that investors have raised their bets for the Eurozone to collapse over the next 12-months.
Despite signs that the 19-member currency bloc could be showing signs of a recovery investors remain doubtful that the Euro will survive.
A report called the Sentix Euro Break up Index (EBI) gave its highest reading since March 2013, with 38% of respondents expecting the currency to bloc to break up over the next 12 months. The figure is up from the 24.3% seen in January. The cause of the rise was concerns over the Greek situation.
The Pound Sterling could regain ground and push higher if the latest UK Construction PMI data comes in positively.
