GBP/EUR exchange rate firms amid German recession risk » Future Currency Forecast

GBP/EUR exchange rate jumps to one week high

The pound euro (GBP/EUR) exchange rate is firming this morning amid a mixed batch of German data releases.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1695, up roughly 0.2% from this morning’s opening rate.

Euro (EUR) to fluctuate amid influx of data?

The euro (EUR) is on the back foot against the majority of its peers this morning as Germany’s latest data paints a poor picture of the Eurozone’s largest economy.

German retail sales unexpectedly dropped in February, reporting a sizable 1.9% contraction, well below t expectations for a 0.3% increase.

This marked the fourth consecutive drop in domestic retail sales, and stoked fears that Germany may have slipped into a recession at the start of this year.

However, the euro’s losses were cushioned by Germany’s latest jobs data. In March, unemployment held steady at 5.9%, with the number of unemployed people increasing by only 4000 rather than the 10,000 people forecast.

Looking ahead to after the Easter weekend, some notable data could see EUR exchange rates fluctuate.

An expected cooling of German and Eurozone inflation may weigh heavily on the euro as this will no doubt stoke expectations that the European Central Bank (ECB) may start cutting interest rates following its April policy meeting.

Pound (GBP) to trade without direction?

The pound (GBP) is trading in a wide range this morning, rising against some of its more risk sensitive peers but muted elsewhere, following the release of the UK’s finalised GDP data.

2023’s fourth quarter GDP data remained unchanged from preliminary readings, reporting a second consecutive economic contraction.

The data marked the lowest level of growth in a 15-year period (excluding the pandemic) and confirmed that the UK fell into a recession in the second half of last year.

However, despite the underwhelming but expected GDP release, the pound managed to hold steady in the first half of today’s European trading session.

Looking past the Easter period and heading into next week, the pound is likely to experience uncertain trading conditions in the continued absence of notable economic data.

As such, Sterling may struggle to find a clear trajectory, and could be left vulnerable to market volatility.

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