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Disappointing German Retail Sales Buoys Pound Euro (GBP/EUR) Exchange Rate

Euro Currency Forecast

Pound Sterling Euro (GBP/EUR) Exchange Rate Rallies as German Economy Runs out of Steam

The Pound Sterling Euro (GBP/EUR) exchange rate continued to rise on Friday, leaving the pairing trading at around €1.1910.

The single currency slumped on Friday, after German retail sales indicated the bloc’s largest economy ran out of steam in the final month of 2019.

German retail sales slumped more than expected, down by 3.3% between November and December.

Added to this, November’s data was downwardly revised to a 1.6% rise further dampening sentiment.

However, data from earlier in the week showed consumer confidence in the bloc’s largest economy rose unexpectedly. This was partly to do with the signing of a phase one trade deal between the US and China, as this put shoppers in Germany at ease.

BoE Decision Buoys Sterling (GBP)

Sterling continued to rise against the single currency on Friday after the Bank of England (BoE) left rates on hold.

Thursday saw the bank leave interest rates on hold at 0.75% after early signs the economy had picked up after last month’s election.

In Governor Mark Carney’s final rate decision, policymakers voted 7-2 in favour of keeping rates unchanged after markets predicted a 50/50 chance of a cut, buoying Sterling.

However, the bank’s minutes revealed policymakers had left the door open to cuts in the future.

During a news conference after the decision, Governor Carney said recent survey data indicated UK growth would improve.

He added:

‘To be clear these are still early days and it’s less of a case of so far so good than so far good enough.

‘Although the global economy looks to be recovering, caution is warranted. Evidence of a pick-up in growth is not yet widespread.’

FCA to Investigate GBP Rally

Meanwhile, the Pound made significant gains before the Bank of England’s (BoE) interest rate decision was revealed.

This has prompted Britain’s market watchdog to investigate GBP’s rally, which has caused speculation about whether anyone knew of the decision before it became public.

The bank asked the Financial Conduct Authority (FCA) to investigate, and the FCA stated:

‘We are aware of the incident and are looking into it.’

Commenting on this, Monex Europe’s forex analyst, Simon Harvey said:

‘There were a few gasps around the room when we saw the price jump quite aggressively.

‘We are not used to seeing a big jump beforehand and so it raised eyebrows.’

Pound Euro Outlook: Brexit Deadline to Boost GBP

Looking ahead to later today, the Euro (EUR) could slump further against the Pound (GBP) following the release of flash Eurozone growth data.

If flash GDP for the final quarter of 2019 disappoints, coming in lower than expected, the single currency will fall further.

Meanwhile, this evening is the UK’s Brexit deadline, with the country expected to leave the European Union at 23:00GMT.

The British currency could make further gains on Brexit certainty next week, causing the Pound Euro (GBP/EUR) exchange rate to rise further.