GBP/EUR Exchange Rate Edges Higher as Eurozone Retail Sales Moderately Improve
The Pound Euro (GBP/EUR) exchange rate rose by 0.3% this morning as non-essential shops have reopened in the UK. The pairing is currently fluctuating around €1.15.
The Euro (EUR) suffered today following the release of the latest Eurozone Retail Sales figure for February, which fell by -2.9%.
This modest improvement on forecasts, however, failed to boost confidence in the Eurozone’s economy.
Bert Colijn, the senior economist for the Eurozone at ING, commented on the data:
‘The February increase in Eurozone retail sales was seen in most countries but driven by boosts thanks to easing relief measures. However, they are still below the 6% level seen in October 2020.
‘Given that Italy saw restrictions ease in February, helped the 8.4% increase in sales while the Netherlands allowed in-store pickups of online orders from mid-February, which resulted in a 5.4% increase for the month. Overall, levels of sales remain subdued at the moment, but this is mainly because substantial restrictions are still in place.’
Euro (EUR) traders are becoming more cautious about the outlook for the Eurozone’s economy, especially now that key economies like France have entered lockdown following Europe’s third-wave of Covid-19 infections.
Pound (GBP) Rises as UK Eases Lockdown Restrictions for Non-Essential Shops
The Pound (GBP) rose against the Euro (EUR) today thanks to the easing of some of the UK’s lockdown measures. Non-essential shops, including restaurants and pubs, have reopened to outdoor customers.
Consequently, UK markets are feeling more optimistic about the nation’s economic recovery, which has taken its first big step as lockdown restrictions have been eased.
UK Business Confidence has also hit a record high, according to Deloitte.
Ian Stewart, Deloitte’s chief economist, commented:
‘Brexit has been a significant dampener on business activity in the last four years but with the UK’s final departure from the EU, such effects are fading. Combined with a successful vaccine rollout and a greatly improved global backdrop we are seeing a turbo-charged surge in business optimism.
‘Having come through the deepest downturn in 300 years UK businesses are firmly focussed on growth. Pent-up business and consumer demand are set to power a strong profits recovery, one already anticipated by the surge in equity markets since February.’
As a result, Pound investors are more cheery about the outlook for the nation’s economy, especially now that key small businesses are being allowed to reopen under new and eased lockdown laws.
In UK economic news, this evening will see the release of the British Retail Consortium’s (BRC) latest Retail Sales report for March.
Any improvement in the figure for last month would further boost confidence in the UK’s retail sector and boost the GBP/EUR exchange rate.
Pound Euro Exchange Rate Forecast: Could a Strong UK GDP Figure Boost Sterling?
Euro (EUR) investors will be awaiting tomorrow’s release of the German ZEW Survey of Economic Sentiment for April.
Any improvement in the outlook for the Eurozone’s largest economy would boost the EUR/GBP exchange rate.
However, Europe’s Covid-19 situation will continue to influence the single currency. Any further signs of rising coronavirus infections in any of the key economies, therefore, would be EUR-negative.
Pound (GBP) traders will be looking ahead to tomorrow’s release of the final UK GDP figure for February.
If this confirms forecasts and shows that Britain’s economy is on the road to growth this year, then the Pound Euro exchange rate will edge higher.