EURGBP Exchange Rate Sees Fresh Three-Month Lows

EURGBP Exchange Rate Sees Fresh Three-Month Lows

The EURGBP exchange rate was flat on Wednesday as the pair awaits more important economic data, but yesterday still saw the lowest prices in over three months. The pair will now be driven by today’s Germany unemployment and inflation data.

The EUR to GBP now trades at 0.8515 after touching the 0.8500 level on Wednesday. The yearly lows were 50 pips lower near the 0.8470 mark.

German data will drive the EUR v GBP

Today will see the release of high-level data for Germany with unemployment and inflation numbers.

Yesterday saw German consumer confidence staying stuck at the June level despite analysts’ expectations for a gain. Economic and income expectations both printed moderate losses, while the desire to purchase was seen increasing slightly. GfK forecast a -0.3 point change in consumer sentiment in August, the same value as in July of this year.

Rolf Bürkl, an analyst for GfK said: “The phase where the decrease of COVID-19 incidence of infection has come to an end and those figures are again on the rise. In addition, the momentum for vaccination has recently slowed down considerably, despite there being sufficient quantities of the vaccine available. This is currently preventing any further significant increase as it pertains to consumer sentiment.”

He added: “Despite the current stagnation of consumer confidence, the domestic economy will make a positive contribution to overall economic development in the second half of the year. Consumers with full wallets will also ensure that this happens.”

Today sees the release of unemployment for Europe’s largest economy with expectations for a 10k drop compared to last months -38k figure.

Inflation for Germany will also be released with a jump to 3.3% expected after the VAT break in the pandemic was unwound. The inflation figure will not phase the ECB with the EU economy still lagging behind the UK’s reopening.

UK housing sees a dip with stamp duty reduction

The UK is light on data this week but will see the release of mortgage approvals on Thursday. That number could be subdued after yesterday saw a drop in July for the Nationwide house price index.

House prices dropped in July after the coronavirus emergency tax break for buyers was scaled back, but demand for larger homes is still expected to support the market with workers forced to be at home, according to mortgage lender Nationwide.

For the month, house prices dropped by 0.5% from June, which was the first fall since March, reducing the annual improvement to 10.5% from June’s 13.4% which was the biggest gain in 17 years.

The EURGBP exchange rate saw a small bounce from the fresh monthly lows but the pair has been under pressure as virus cases dropped in the UK, while economic data in the Eurozone has been flat with the ongoing lockdowns there. Tomorrow sees further German data with a GDP update and Eurozone inflation.