The EUR’s recent gains against GBP were solidified last week, with the single currency trading close to a six-month high against the pound.
Currency Pair | % Change (Month) | Difference on £200,000 | |
---|---|---|---|
![]() | ![]() | 1.2% | €2,720 |
The pound did manage to find some welcome support above 1.11 interbank rate but as of yet, has failed to make any sustainable inroads above 1.12, as the EUR continues to outperform its GBP counterpart.
Whilst EUR sellers will be buoyed by the current highs, it has failed to replicate this resilience against the other major currencies.
EUR/USD interbank rates remain marooned under 1.13, with the USD continuing to find plenty of support around the current levels, as concerns over the slow-down in global economic growth drive investors to seek safe haven currencies like the dollar.
The Eurozone economy remains stagnant, despite the better than expected Industrial Production data realised over the weekend. The official figure of 0.9% growth represented an improvement on last month’s data, whilst also surpassing the markets predicted outcome by 0.2%.
Despite this upturn, the European Commission have predicted weak growth in the second half of 2019, whilst also downgrading its economic forecasts for the single bloc in 2020. Concerns over a slowdown in global trade and Manufacturing output inside the Eurozone, were cited as two of the key reasons for the dovish outlook. German Manufacturing figurers were down by 4% in May compared to the same period last year, with the Eurozone lynchpin economy continuing to show signs of an economic slowdown.
Brexit uncertainty could be contributing to the current tensions and a slowdown in trade inside the single bloc, with a resolution to the current standoff in negotiations on hold whilst the UK remains in relative political limbo until a new Prime Minster is appointed later this month.
With the ECB (European Central Bank) already stating that they would be prepared to cut interest rates below the current level of 0%, and also reintroduce Quantitative Easing to help support the Eurozone economy if necessary, it is clear that concerns over the economic outlook remain.
Eurozone economic data is relatively sparse this week, with the main focus likely to centre around Tuesday’s trade balance figures, followed by Wednesday’s Inflation data and Construction Output figures.
Concerns cited over the slowdown in global trade and the potential knock effects for the Eurozone economy could intensify, should export figures fall below expectation.
Inflation figures are predicted to show an improvement to 0.2% but with Construction Output expected to fall from last month, EUR sellers will be hoping for a positive release to help solidify the single currencies position against the pound.