GBP/EUR Exchange Rate Rallies on Strong UK CPI Figures
The Pound Euro (GBP/EUR) exchange rates is currently resting close to today’s opening levels, as the pairing rallies from its early losses following the release of the UK’s latest Consumer Price Index (CPI).
At the time of writing the Pound Euro GBP/EUR exchange rate is virtually unchanged from today’s opening levels, having recovered from a 0.3% fall earlier in the morning.
Pound (GBP) Exchange Rates Bolstered by Surging UK Inflation
The Pound is back on solid footing this morning as investors welcomed the UK’s latest CPI figures.
Data published by the Office for National Statistics (ONS) showed that UK inflation jumped from 2.5% to 2.7% in August, outpacing a modest drop to 2.4% that had been forecast as propelling the UK’s inflation rate to a six-month high.
The ONS attributed the jump to rising prices for recreational activities, transport and clothing.
Some analysts were wary following the data as they warned of the impact soaring inflation could have on real wages as the gap with wage growth is eroded once more.
UK inflation increased to 2.7% in August; the second month of increase after a period of decline. Hence, gains in real wages remain illusive, and growth in private consumption is thus based on lower savings and more debt #macrobond pic.twitter.com/6CBvFyOo7I
— Ulrik Bie (@UlrikBie) September 19, 2018
However, the overall impact on GBP exchange rates this morning has been positive, with markets speculating that the surge in inflation may pressure the Bank of England (BoE) into raising interest rates earlier next year.
Euro (EUR) Resilient Following Robust Construction Figures
Meanwhile the Euro (EUR) was prevented from ceding further ground to Sterling this morning following some robust Eurozone construction figures.
Today’s data revealed construction output in the bloc grew 2.6% in July, beating forecasts it would slow to 1.7% while also being revised up to 3% in June.
The growth in output was largely attributed to rising building construction, which helped to mask a fall in civil engineering.
GBP/EUR Exchange Rate Forecast: Further Slowdown in Eurozone Growth to Weaken the Euro?
Looking ahead to the second half of this week’s session, the Pound Euro (GBP/EUR) exchange rate may look to rally as the Eurozone releases its latest PMI figures.
This data is expected to highlight how growth in the bloc continues to moderate in 2018, with the latest PMI readings expected to reveal that expansion in the Eurozone’s private sector continued to slow in September.
However Sterling’s road to recovery will not come without its own hurdles as in the meantime the UK will publish its latest retail sales figures on Thursday.
Economists currently forecast that sales growth will have contracted from 0.7% to -0.2% in August as the boost from the World Cup and warm weather wears off.