Euro Pound (EUR/GBP) Exchange Rate Rises following Positive German Data
The Euro Pound (EUR/GBP) exchange rate is edging higher this morning following an uptick caused by Germany’s factory orders.
At the time of writing the EUR/GBP exchange rate is trading at around €0.8619, which is around 0.1% higher than this morning’s opening rate.
Euro (EUR) Muted following German Data Release
The Euro (EUR) ticked higher against the Pound (GBP) this morning, although the upside seems limited, after German factory orders printed better than expected.
As Germany is the Eurozone’s largest economy and centres around manufacturing, factory orders can be impactful for the Euro. This morning factory orders increased by 0.8% in October after being downwardly revised to -2.9% in September. Forecasts predicted that orders would only increase by 0.1%.
The Euro firmed in response to the data. The larger-than-expected increase has raised hopes that Germany, and by extension the Eurozone, may be heading for a milder recession. However, impetus for the Euro soon stalled, limiting the single currency’s gains.
EUR investors may also be trading in relation to geopolitical headlines. The continued warfare between Russia and Ukraine could be hindering the Euro’s movement, as further missile strikes have been reported in Zaporizhzhia, Ukraine.
Pound (GBP) Trading Narrowly as Investors Focus on Domestic Headlines
The Pound is muted today, softening amid a lack of impactful data.
Meanwhile, downbeat news stories focusing on inflation and food supply issues are making GBP investors wary.
The National Farmers’ Union (NFU) has warned that the UK could be ‘sleepwalking’ towards a food supply crisis. British farmers are struggling with soaring energy costs, which is directly impacting their ability to grow food. According to the NFU’s report, 7,000 agricultural business have closed since 2019.
NFU President Minette Batters called for more government support saying:
‘British food is under threat … at a time when global volatility is threatening the stability of the world’s food production, food security and energy security.’
Food supply disruptions will likely compound inflationary pressures currently facing the UK consumer. This, coupled with fears over the economic downturn, is keeping the Pound muted today.
Euro Pound Exchange Rate Forecast: EUR to Strengthen Post GDP Estimate?
The Euro Pound exchange rate could be driven by the Eurozone’s GDP growth rate estimate tomorrow.
According to forecasts the bloc’s GDP rate is expected to grow by 0.2%. As this is the third estimate, it is unlikely to cause movement unless it deviates from previous readings. If it is revised lower, EUR could slide; if it’s revised higher, the Euro could soar.
Turning to the UK, a lack of impactful data tomorrow could see investors focus on domestic headlines. If the news continues to focus on inflationary pressures and the cost-of-living crisis, GBP could face headwinds.
Otherwise, the increasingly risk-sensitive Sterling could move in line with risk appetite tomorrow.
