The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened to 1.40 on Tuesday as economic data out of Spain and Italy came in below forecasts and as concerns over Greece remain high.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a session high of 1.4006
On a monthly basis Spanish retail sales were shown to have declined by -0.4% in January, a drop from the previous months revised figure of a rise of 1.3%. Economists had been expecting a rise of 1.08%. The annual figure came in stronger than expected however, suggesting that the nation is beginning to see a turn around.
Italian data was the main drag on the Euro as it showed that industrial production fell sharply on both an annual and monthly basis. On an annual basis, production fell by -2.2%, a figure far worse than the 0.1% rise predicted by economists. On a monthly basis, production declined by -0.7%.
Concerns over Greece were heightened on Monday as a meeting of European Finance Ministers told Greece to ‘stop wasting time’ and engage in serious talks about reforming its economy. Worries over a possible Greek exit from the Eurozone remain high.
‘It is taking way too long. We have offered to support them, but that goes hand in hand with conditions. There has been no implementation, so we have to stop wasting time,’ said Jeroen Dijsselbloem, president of the Eurogroup.
UK Retail Data Supports Sterling
The Pound Sterling found support from a report released by the British Retail Consortium (BRC), which showed that retail spending in the UK was 1.7% higher in March compared to the preceding year. On a monthly basis, sales rose by 0.7%.
Also putting pressure on the Euro was the launch of the European Central Bank’s quantitative easing programme.
Retail spending on the BRC’s like-for-like measure, which excludes new stores and more closely reflects how stores report sales to shareholders, rose by 0.2% on the year, the same pace of growth as January.
‘So far, 2015 has been positive for both retailers and consumers and it shows no signs yet of changing course,’ said BRC director general Helen Dickinson.
Further gains for the Pound are likely as attention shifts to a speech due to be delivered by Bank of England governor Mark Carney. Any hint that the central bank is getting closer to hike interest rates and the Pound will rise.
