British Pound to Euro (GBP/EUR) Exchange Rate Bullish; UK Data Disappoints Forecasts
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In the latter week the GBP to EUR exchange rate has travelled sideways; however, today has seen a steeper decline for Sterling.
Friday has seen a disappointing day for the Pound that has fallen recently in the currency market, as the latest dissatisfaction in a string of bad data came in the form of Trade Balance figures.
Exports fell against the level on imports in June in the UK, with the trade balance deficit climbing to -£2459 despite forecasts of -£2050. Furthermore the Non-EU Trade Balance figures also climbed further into deficit reaching -£3841, bypassing the -£3700 predictions.
However some positives were seen for the UK by way of UK Construction Output figures which reached 5.3% in June, a surprise jump from the forecast 4.7%.
Economist Howard Archer stated: ‘Net trade was clearly of little help to UK growth of 0.8% quarter-on-quarter in the second quarter. In fact, negative net trade probably had a limiting effect on UK GDP growth in the second quarter.’
However some economists fear that the most recent UK figures are lacking and could cause the UK economic growth to become lethargic.
Markit economist Chris Williamson stated: ‘With the stronger exchange rate also making imported goods more attractively priced in the UK, a fall in exports is likely to be accompanied by rising imports, earning trade could act as a drag on the economy in the second half of the year, causing economic growth to slow.’
Conversely the Euro has also experienced unfavourable figures on Friday with the publication of the German Trade Balance which has slipped below the forecast 18.5B, instead only attaining 15.0B.
Friday’s data has shown that imports into Germany have risen surprisingly to their swiftest rate in the latter three years.
Meanwhile Italy has entered its third recession since the great financial crisis of 2008.
President for the European Central Bank Mario Draghi suggests that Italy holds sole responsibility for the latest wound to the Eurozone.
Draghi commented: ‘I keep on saying the same thing, really—I mean, of reforms in the labour market, in the product markets, in the competition, in the judiciary, and so on and so forth. These would be the reforms which actually have and have shown to have a short-term benefit.’
For now, the EUR to GBP exchange rate is residing between the boundaries of 0.7930 and 0.7972, however with negative data published for both economies, the exchange rate could continue its sideways trajectory in the near future.
However, Friday has shown the Euro gaining some of its lost ground in the currency market.