After slumping to a new intraday low yesterday morning the Pound Euro (GBP EUR) exchange rate rallied yesterday evening as German trade data disappointed.
Euro (EUR) Slips as German Trade Disappoints
The Euro was weakened yesterday following as investors were left disappointed by Germany’s latest trade balance figures.
According to data released by German stats office Destatis, the nation’s imports and exports both sharply dropped in June, contracting 4.5% and 2.8% respectively.
The dramatic drop in trade prompted debate over the possibility that the Eurozone’s recent recovery could finally becoming to an end, hindered in part by the current strength of the single currency, with is making goods from the bloc less appealing in foreign markets.
While many analysts caution against reading too much into a single month of stats, markets are clearly shaken by the possibility of a long-term down trend in Germany’s trade figures, particularly in exports, which has long been a major source of economic growth in the Eurozone.
On the other hand observers may welcome a dip in Germany’s exports as the country faces increased criticism over its sizable trade surplus and dominance in European trade.
Pound (GBP) Shrugs off Brexit Concerns
The Pound managed to rebound from its lows yesterday as the currency appears to be becoming increasingly immune to Brexit related news.
Despite recent criticism that the UK government has fumbled the start of Brexit negotiations and that there were still splits in the cabinet on what approach to take in talks Sterling has remained relatively stable, with recent movement being based on more on economic data.
However is this a sign that the Pound is no longer a politicised currency as it was last year or are markets just waiting for more concrete details as to what deal Britain is likely to get at the end of negotiations?
GBP EUR Forecast: UK Trade Deficit to Grow in June?
Looking ahead the GBP EUR exchange rate is likely to stumble again on Thursday as the UK releases its own trade figures, with economists forecasting that Britain’s trade deficit will expand from £3.07bn to £3.6bn in June.
Further pressure may be put upon Sterling by another expected decline in UK Industrial Production, as factory output is predicted to contracted for the entirely of the second quarter.
Meanwhile the Euro may be weakened tomorrow as France releases its own industrial production figures, with output expected to plummet from 1.9% to -0.4% in June.
Current Interbank Exchange Rates
At the time of writing the GBP EUR exchange rate was trending around 1.1082 and the EUR GBP exchange rate was trending around 0.9023.