- Euro positive despite mixed German PPIs – Spanish trade deficit worsened
- Pound drops off ahead of UK borrowing figures – Prior rally rates fade away
- Remaining Eurozone data to focus on current accounts – UK borrowing figures due imminently
The Euro has opened trading today on a positive note against the Pound, although domestic data out of the single currency bloc has not been especially supportive. Germany’s July PPI has shown a dip from 0.4% to 0.2% on the month, while the annual figure has ‘improved’ from -2.2% to -2%.
Foe the Pound, exchange rates against peers have largely dropped off, on account of gross profit-taking and the impending public sector net borrowing figures for July.
With Eurozone releases, the next news to watch out for will concern the June current account from Greece, as well as Italy’s later current account for the same month.
Greece has an expansion of its current deficit forecast, while Italy is expected to see a widening of the current surplus.
(Last updates August 19th, 2016)
The EUR/GBP exchange rate declined on Thursday as the Pound was a surprise star, rising against most of its usual peers due to a much better-than-expected outcome for retail sales in July.
Eurozone Economic News: Euro (EUR) Rose Yesterday after EZ Inflation and ECB Account
Euro exchange rates were strong overall yesterday, with gains being recorded of 0.3% against the Indian Rupee (EUR INR), 0.3% against the US Dollar (EUR USD) and 0.5% against the Japanese Yen (EUR JPY).
The day’s Eurozone data started off positive, with France’s Q2 unemployment rate falling from 10.2% to 9.9%. The main event, however, consisted of the June Eurozone current account and construction output figures, as well as the July inflation rate stats for the currency bloc.
Both the current account and construction output rose in June, but while the annual inflation rate rose from 0.1% to 0.2%, the monthly variant damagingly fell from 0.2% to -0.6%.
The last major news of the day consisted of the European Central Bank (ECB) policy meeting accounts from its July meeting. The key phrase taken from the account was that;
‘The view was widely shared that the Governing Council needed to reiterate its capacity and readiness to act, if warranted, to achieve its objective, using all the instruments available within its mandate, while not fostering undue expectations about the future course of monetary policy’.
As a brief translation, the phrase implied that a more measured approach would be taken in the wake of the EU Referendum, rather than hastily slashing interest rates and expanding quantitative easing, as the Bank of England (BoE) did in August.
Pound Sterling (GBP) Exchange Rates Soar after Retail Sales Bettered Expectations
In a surprise move, the Pound managed to make and sustain a prolonged rally in exchange rates over virtually the entirety of Thursday, thanks to forecast-beating retail sales results for June.
While the annual figures had been forecast to fall, the reality saw healthy increases in the number of sales made, both on the month and the year.
This went a significant way to quelling the fears of some investors about how bad the impact of the EU Referendum would be, although others were more restrained and pointed out that the summer boost from tourist spending could be clouding the actual indicators of how the economy was faring in the first post-Referendum month.
Future EUR GBP Forecast: Can German PPI Result Gel Outdo Reduced UK Borrowing?
The next Eurozone data due will be the imminent German PPI results for July, which have been forecast to dip slightly on the month but move closer to a positive figure on the year.
Other Eurozone releases of note will consist of the Greek current account for June, Spain’s pessimistically forecast trade balance for the same month and Italy’s June current account, which is expected to rise.
The UK is only expected to offer one piece of data, concerning public sector net borrowing in July. Based on predictions, a smaller amount (£3.3bn) is expected to be borrowed compared to the prior £7.31bn.
Current EUR, GBP Exchange Rates
At the time of writing, the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.8618 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.1605.