Slower-than-Forecast Eurozone Flash GDP Leaves Pound Euro (GBP/EUR) Exchange Rate Muted
The Pound Sterling Euro (GBP/EUR) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of €1.0912.
On Wednesday morning, flash GDP data for the Eurozone revealed that growth in the bloc increased by a lower-than-expected 0.2% during the second quarter.
This is down from 0.4% growth during the first three months of 2019.
Added to this, the bloc’s flash core inflation rate rose by a lower-than-forecast 0.9%.
Further data showed the Eurozone’s inflation slowed to a 17-month low in July to 1.1% from June’s 1.3%.
Disappointing flash data likely left the single currency muted against Sterling.
Worst July Performance of German Labour Market Since 2015 Leaves Euro (EUR) Flat
On Wednesday, German unemployment remained steady at 5% in July.
The number of people out of work rose by a lower-than-forecast 1,000.
However, the non-seasonally adjusted data revealed that the number of unemployed Germans rose to 2.275 million.
This was the highest level since March, and the worst July performance of the labour market since 2015.
Commenting on this morning’s data, Chief Economist ING Germany, Carsten Brzeski wrote:
‘All in all, the outlook for the German economy has become grimmer. While there is no reason to panic and the situation is definitely not as critical as in 2009, the risk of a longer stagnation is increasing. Today’s labour market data indicate that in the months ahead, private consumption will no longer be the powerful growth driver it used to be in recent years.’
However, the wider Eurozone’s unemployment rate edged down to an 11-year low of 7.5%
Sterling (GBP) Left Flat despite Unexpected Rise in UK Consumer Confidence
Overnight, data showed that UK consumer confidence edged up to a higher-than-forecast -11 in July.
Markets expected confidence to slide further from June’s reading of -13.
GfK, who conducted the survey revealed that five out of the six measures increased.
Commenting on today’s data, Client Strategy Director at GfK, Joe Staton said:
‘Pre-Brexit consumers are marginally more bullish this month with improvements in levels of confidence across most measures. Although it’s too soon to judge any impact of a post-Boris bounce, we can report a boost in attitudes to our personal financial situation in the face of low interest rates and day-to-day inflation, a buoyant labour market and growth in real wages.
‘Consumers have generally been less affected by Brexit uncertainties than business since the referendum. However, the coming months to the 31October departure date will test the strength of this confidence.’
Pound Euro Outlook: Will a Dovish Carney Weigh on GBP?
Looking ahead to Thursday, the Pound (GBP) could slide against the Euro (EUR) following the release of the UK’s manufacturing PMI.
If Markit reveal manufacturing activity has slumped further into contraction Sterling could slump.
Meanwhile, it is likely the Pound will be left under pressure ahead of the Bank of England’s (BoE) interest rate decision.
While the bank is expected to leave rates unchanged, if Governor Mark Carney suggests the likelihood of a 2019 rate cut has increased, the Pound Euro (GBP/EUR) will fall.