Chance for Greater GBP/EUR Exchange Rate Gains on Rising UK Sales Activity
The Pound (GBP) has firmed against the Euro (EUR) today, rising to a level of €1.1224 on the GBP/EUR exchange rate.
This appreciation comes after the news that UK inflation rates have risen on the year in July, putting more pressure on the Bank of England (BoE) to raise interest rates.
Looking ahead, the recent GBP/EUR exchange rate gains could extend on Thursday when UK retail sales data comes out.
The retail sector results are out during the morning and will cover monthly and annual sales in July, with and without fuel sales included.
Current forecasts are for a recovery from negative monthly activity in June to growth in July, as well as an acceleration in the pace of base year-on-year sales growth.
The one negative printing could be the year-on-year reading excluding fuel sales, which is tipped to decline from 3% to 2.8%.
The ‘fuel-less’ figures are considered more accurate than base readings, as they discount the often volatile factor of energy prices.
If all the retail sales data prints as forecast then the Pound could advance against the Euro; such results might raise GBP trader hopes about UK economic resilience.
Future GBP/EUR Exchange Rate Forecast: Are Pound to Euro Gains ahead on UK Borrowing Data?
Beyond the coming UK retail sales data, the Pound to Euro exchange rate (GBP/EUR) could also be affected by government borrowing data out on Tuesday next week.
Current expectations are for the deficit for public sector borrowing to have reduced during July, with a shift from £-4.53bn to £-2.1bn.
Although this would still leave the UK with a sizable borrowing deficit, any kind of reduction could still be enough to cause GBP/EUR exchange rate gains.
Euro to Pound (EUR/GBP) Exchange Rate Gains Forecast on Eurozone Trade Balance Stats
On the other side of the currency pairing, the Euro (EUR) could rise against the Pound (GBP) on Thursday when a Eurozone trade balance reading comes out.
Covering changes to trading in the single currency bloc during June, this is expected to reveal that the existing surplus grew from €16.5bn to €18bn.
Such a result would mean that the Eurozone exports more than it imports; while not entirely good news for non-EU nations, such a result could still boost Euro demand.
Accelerating Eurozone Inflation could Push EUR/GBP Exchange Rate Higher
Another piece of Eurozone data that might support Euro to Pound (EUR/GBP) trading will be this Friday’s inflation rate figures for July.
The finalised readings for the Eurozone are expected to show a faster pace of price growth during the month, with the core and base year-on-year readings tipped to rise.
A faster pace of inflation will put more pressure on the European Central Bank (ECB) to consider raising interest rates and could boost Euro demand as well.
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