Overall Slowdown in Eurozone Growth Leaves EUR/GBP Exchange Rate Steady
The Euro (EUR) has made limited movement against the Pound (GBP) today, but more widely is trading at the lowest level since May.
The current lack of demand for the single currency has come from the morning’s Eurozone PMI readings, which have confirmed a composite and services decline.
While October’s readings didn’t fall by as much as forecast, the results still rattled Euro traders and have had a cooling effect on the EUR/GBP exchange rate.
Both sets of PMI data were collected by IHS Markit; company Chief Business Economist Chris Williamson said of the results:
‘Eurozone companies reported a disappointing start to the fourth quarter. Business activity is growing at its slowest rate for over two years and expectations have slumped to the bleakest since the end of 2014.
‘An export-led slowdown, linked to growing trade tensions and tariffs, has been exacerbated by rising political uncertainty, growing risk aversion and tightening financial conditions.
‘The slowdown has consequently become more broad-based to increasingly envelop the services economy.’
Pound Sterling to Euro (GBP/EUR) Rate Steady after DUP MP Warns of No-Deal Brexit
The Pound (GBP) remains near a 6-month high against the Euro (EUR), although as with the single currency there has been little direct movement so far today.
A warning about a no-deal Brexit from Democratic Unionist Party (DUP) MP Jeffrey Donaldson has limited GBP movement today, due to recurrent fears about Brexit.
In a Twitter post, Mr Donaldson lamented that the UK was seemingly on course to crash out of the EU:
‘Looks like we’re heading for no deal. Such an outcome will have serious consequences for economy of Irish Republic.
‘In addition, UK won’t have to pay a penny more to EU, which means big increase for Dublin. Can’t understand why Irish Government seems so intent on this course.’
Euro to Pound Exchange Rate Forecast: Is EUR/GBP Volatility ahead on Retail Sales Slowdown?
The Euro (EUR) is at risk of dropping against the Pound (GBP) on Wednesday, in the event that September’s Eurozone retail sales figures disappoint.
Current expectations are for a decline in the pace of annual sales activity, but a converse rise for the month-on-month reading.
Notably, the monthly reading is tipped to turn from -0.2% contraction to 0.1% growth, while an annual decline from 1.8% to 0.7% would still indicate growth.
Any Euro losses on Wednesday could be reversed on Thursday, provided that Germany’s trade balance reading shows an expansion of the existing surplus.
The week’s last major data will be UK GDP growth rate figures, out on Friday.
Current expectations are for faster growth across the board, which could enable late-week Pound to Euro exchange rate gains.
