Stronger Eurozone Growth Rate Fails to Prevent Pound Euro (GBP/EUR) Exchange Rate Rebound
A better-than-expected uptick in the third quarter Eurozone growth rate failed to prevent the Pound to Euro exchange rate recovering ground.
While the quarterly gross domestic product held steady at 0.2%, defying forecasts of a modest slowdown, this offered limited support to the Euro (EUR).
Confidence in the European economic outlook remained generally muted as lingering global trade tensions continue to stifle growth momentum.
With economist forecasts suggesting German remains on track for a technical recession in the third quarter, the single currency saw little upside potential at this juncture.
As the headline Eurozone consumer price index eased from 0.8% to 0.7% and fell further away from the European Central Bank’s (ECB) 2% target, this put fresh pressure on EUR exchange rates.
GBP Currency Rates Push Higher Despite Deteriorating Consumer Sentiment
Support for Sterlinig picked up despite an underwhelming performance from the UK consumer confidence index overnight.
Although sentiment fell deeper into negative territory, with the index dipping from -12 to -14, this failed to drag on the GBP/EUR exchange rate.
While a trending sense of Brexit-based anxiety is likely to keep consumer sentiment in decline for the remainder of the year, investors still found cause for optimism.
With the UK no longer at risk of crashing out of the EU in 2019, GBP exchange rates returned to a generally positive footing.
However, this strength could ultimately prove limited as a sense of political anxiety continues to mount in anticipation of December’s early general election.
The mood towards the Pound could also sour on Friday with the release of October’s UK manufacturing PMI.
As forecasts point towards another lacklustre monthly performance from the manufacturing sector confidence in the underlying resilience of the UK economy is likely to take a fresh blow.
Euro (EUR) Forecast to Shrug off Finalised Eurozone Manufacturing PMI
The finalised raft of Eurozone manufacturing PMIs may have a less significant impact on the GBP/EUR exchange rate, however.
Unless the PMIs see any significant revision from their initial readings the Euro is unlikely to show any particular reaction to the data.
If the German manufacturing sector sees a greater slowdown than initially thought, though, this could drive the single currency sharply lower across the board.
As long as signs continue to point towards a German recession the Euro may struggle to find support against its rivals.
September’s trade data could offer EUR exchange rates a boost, however, if Germany’s trade surplus widens on the month.
Any evidence of greater resilience within the Eurozone’s powerhouse economy could encourage investors to buy back into the Euro, even if global trade tensions persist.