We saw the release of positive retail sales figures for Germany. This paired with an increased climate indicator for May led to Euro strength. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past month.

Currency Pair% ChangeDifference on £200,000
GBPEUR1.77%€4078
Italy’s credit rating could be downgraded this month

Euro gains against USD and GBP yesterday

The Euro gained yesterday against the Pound as month-on month retail figures for April were released. These measure the performance of the German retail sector in the short term. Retail sales figures came in - above the 0.7% expectation – at 2.3% from -0.6% in March. This was in addition to the German unemployment rate dropping to 5.2% from 5.3%. Also released yesterday was the Business Climate indicator for May by the European Commission, which came in at a reading of 1.45 from 1.39. This is a business indicator designed to deliver an assessment on the cyclical situation within the Euro area. A rise in the indicator points to an upswing in activity and an improvement in the business climate. These releases helped the Euro gain almost a cent against the dollar and pound yesterday.

Italian situation to slow Euro gains

At the beginning of the week, the Euro strengthened after news that Italian President Sergio Mattarella rejected leader of the far right league - Matteo Salvini's proposal for Minister of the Economy, a Eurosceptic. This had a positive effect in the short term as it strengthened Italy's position in the EU.

In the longer term I expect more unrest from Italians – aimed especially towards the Germans and the French - as Italexit and deeper economic integration of member countries is debated. This could weaken the Euro against the Pound amidst the Brexit factor,

Ex-IMF official Carlo Cottarelli will now form a technocratic government leading to new elections. He has promised a prudent management of public finances and is expected to lose a vote of confidence in parliament, which would trigger fresh elections by the autumn.

GBPEUR rates could go either way. What I would recommend is getting in touch with our Account Managers to explore our contract options in this volatile period. 

Economic data to shape end of month’s exchange rates

Today at 1000 Eurostat will release the Consumer Price Index (CPI) percentage for the Eurozone. CPI a way to measure changes in purchasing trends and inflation. The expected figure of 1.6% is seen a positive for the Euro where as anything under the last consensus of 1.2% could see the Euro fall.

Friday will also see Manufacturing data and GDP figures for Italy so be in touch with our expert team to be informed on the latest developments.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.