GBP/EUR Exch Rate Rises on Unemployment
The Pound to Euro (GBP/EUR) exchange rate rose by 0.6% today. The pairing is currently at around €1.11 in forex trading. This was despite stronger-than-forecast German factory orders in June.
The Euro (EUR) struggled to gain on the Sterling. This followed today’s publication of Germany’s factory orders figures for June, which rose from 10.4% to 27.9%.
ING Bank Chief Economist Carsten Brzeski was, however, optimistic about the data. He said today’s numbers suggest that the industry could catch up with the momentum in the rest of the economy.
Yesterday also saw the Eurozone’s retail sales fully recover in June. It was buying hopes that the bloc’s economy could be on the road to recovery.
Nonetheless, Bert Colijn, the Senior Economist for the Eurozone at ING, was more downbeat. He warned not to get too excited about these strong numbers though.
He said as pent-up demand fades, the picture of rising unemployment and a stalled recovery in consumer confidence will subdue sales growth. That will be in the second half of the year.
Pound (GBP) Rises as the UK Economy Recovers
In forex news, the Pound (GBP) rose against the single currency today. This was after the Bank of England (BoE) held its interest rate at 0.1% as forecast.
However, the Bank warned of high levels of UK unemployment levels in the months ahead. Predictions of around 2.5 million are being made unemployed owing to a Covid-19 slump.
However, Sterling benefited from a bullish sentiment from the BoE that the British economy was recovering faster than first predicted.
In other UK economic news, today saw the release of the final construction PMI for July. It beat forecasts, rising from 55.3 to 58.1.
As a result, GBP investors became more hopeful that Britain’s economy could stage a strong recovery in the months ahead.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, was, however, more cautious.
He said, after a summer of this blistering return to growth, building companies should prepare for chilly autumn. This is as furlough schemes come to an end and the real strength of the UK economy is revealed.
Making up for lost time is one thing, but real sustainable growth is what the sector needs, Brock said. Otherwise, this recovery is just building on soft sand, he added.
Meanwhile, in forex, Euro (EUR) investors will be keeping a close eye on tomorrow’s Germany’s trade balance figure for June. Any signs of recovery for the Eurozone’s powerhouse economy will allow traders to see the Euro begin to regain losses.
