Euro Pound (EUR/GBP) Exchange Rate Narrows amid Sour Market Mood
The Euro Pound (EUR/GBP) exchange rate is trading within narrow boundaries today, as the sour market mood favours the US Dollar over the Euro.
At the time of writing, EUR/GBP is trading at around £0.8609, showing minimal movement from today’s opening rates.
Euro (EUR) Muted as US Dollar Strengthens
The Euro (EUR) is enduring muted trade during today’s session, despite the souring market mood. This is largely due to the common currency’s negative correlation to the US Dollar (USD), the main beneficiary of the downbeat mood.
The mood is souring on the back of the morning’s Chinese trade data, which indicated that exports had fallen significantly faster than expected. Over July, exports were down by 14.5%, showing further falls from June’s already diminished levels.
Because of this, the global economic outlook was seen to deteriorate, as the economic superpower shows continued signs of struggling.
Julian Evans-Pritchard, Head of China Economics at Capital Economics, commented:
‘Most measures of export orders point to a much greater decline in foreign demand than has so far been reflected in the customs data. And the near-term outlook for consumer spending in developed economies remains challenging, with many still at risk of recessions later this year, albeit mild ones.’
Furthermore, a lack of impactful macroeconomic data is preventing the Euro from capitalising on the sour market mood. As a safer currency, EUR usually benefits somewhat from these downward shifts.
Pound (GBP) Wavers amid Downbeat Retail Data
The Pound (GBP) is seeing mixed trade today, strengthening against riskier assets but struggling against safer peers.
The UK’s retail sector was found to be on a bit of a downtrend, which is sapping sentiment towards Sterling. The British Retail Consortium (BRC) found that an increasing number of UK retailers were relying on promotional offers to attract customers.
Paul Martin, Head of Retail at KPMG, commented:
‘UK consumers have been hugely resilient throughout the cost of living crisis but stubbornly high inflation coupled with rapidly rising interest rates will test their ability and willingness to keep on spending for the rest of this year.’
With elevated interest rates and high inflation continuing to embroil consumers, the UK’s economic outlook remains downbeat.
Elsewhere, the sour market mood is bringing further headwinds to Sterling, due to its increasingly risk-sensitive nature.
EUR/GBP Exchange Rate Forecast: Market Dynamics in Focus
Looking ahead for the Euro, the data calendar is set to remain light through the short term. Because of this, the common currency may be left vulnerable to analysis of the Eurozone’s economic outlook.
With the bloc’s economy currently struggling between elevated interest rates and a cost-of-living crisis, further headlines may weaken EUR.
A similar story is true for the Pound, with the data calendar set to remain bare. As an increasingly risk-sensitive currency, Sterling may be left open to shifts in risk appetite. A souring market mood could weaken the Pound, where a more upbeat mood may lift it above the safer Euro.