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Euro to Pound Sterling Exchange Rate Avoids Major Losses despite Highly Concerning German Factory Stats

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Euro to Pound Exchange Rate On Track for Gains despite Broad Euro Weakness

Despite some of this week’s key Eurozone ecostats coming in with particularly disappointing results, the Pound’s (GBP) broad weakness has meant that the Euro to Pound Sterling (EUR/GBP) exchange rate is still on track to sustain gains.

While recent movement in EUR/GBP has been limited, the pair continues to edge higher bit by bit.

After opening this week at the level of 0.8955, EUR/GBP briefly dipped before pushing higher. EUR/GBP tested levels just below the previous week’s post-January high, and at the time of writing on Friday was trending near the level of 0.8972.

A trio of disappointing UK ecostats and persisting no-deal Brexit fears left the Pound unable to recover from near its worst levels.

As a result, even the Euro (EUR) which has been hit by concerning data since yesterday has been able to edge higher versus the British currency.

Euro (EUR) Exchange Rate Strength Lightens on Concerning German Factory Data

This week has been a mixed one for the Euro outlook, as the latest European Central Bank (ECB) developments were taken well by markets, but the latest Eurozone data has made investors more anxious about the bloc’s economy.

International Monetary Fund (IMF) Chairwoman Christine Lagarde was picked to succeed Mario Draghi as the President of the ECB when his term ends this year.

She is expected to maintain a similar stance to Draghi on monetary policy and is being seen as a continuity candidate. This had little impact on the Euro outlook, which was a sign of confidence from investors.

However, despite the general confidence towards the ECB outlook, Eurozone data has been disappointing in recent sessions.

Yesterday’s Eurozone retail sales and today’s German factory orders stats both printed unexpectedly deep contractions in month-on-month results.

The contraction in German factory activity left analysts concerned that the Eurozone‘s economy may see more of a downturn than expected. Despite this though, EUR/GBP was able to avoid notable losses today.

Pound (GBP) Exchange Rates Fail to Recover as UK Data Remains Concerning

EUR/GBP is on track to see slight gains this week despite the Euro’s weakness, and this is largely due to the Pound’s own weakness.

Sterling remains highly unappealing against most currency rivals, due to persisting fears that the Brexit process could end with a no-deal outcome.

Both potential contenders to be Britain’s next Prime Minister have indicated that a no-deal Brexit is possible if they cannot get a new deal.

On top of the persistent no-deal Brexit jitters, uncertainty on how Brexit will unfold has caused recent UK data to fall well short of expectations.

Markit’s June PMI results all disappointed and worsened concerns about Britain’s economic outlook, and today’s labour productivity data also showed a contraction.

Economists noted that businesses were just too hesitant to begin major projects and such with the outcome of the Brexit process still shrouded in so much uncertainty.

Euro to Pound (EUR/GBP) Exchange Rate to be driven by Eurozone Outlook

Next week looks to be another significant one for Eurozone data, which means European Central Bank (ECB) speculation and bets are likely to remain in focus for Euro to Pound (EUR/GBP) exchange rate traders.

Due to weak Eurozone data in the past week, speculation that the European Central Bank could introduce more monetary policy easing has risen, and this is keeping pressure on the Euro.

Next week’s data, which includes German trade balance, French German and Eurozone industrial production, and French and German inflation rate stats, could further influence ECB speculation.

If the week’s Eurozone stats beat expectations, especially key ones like German inflation, ECB interest rate cut and easing bets could lighten and EUR/GBP may be in for further gains.

However, slews of underwhelming Eurozone data could be just what the Pound needs to rebound from its recent lows more easily.

The Euro to Pound (EUR/GBP) exchange rate may also tumble from its highs if there are any optimistic developments in UK politics.