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EUR GBP Higher Despite German Economic Data

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The EUR GBP exchange rate was higher into Thursday despite weaker data from the German economy. Retail sales came in well below expectations, hinting at slower consumer activity in the third quarter. Manufacturing was also lower in the largest European economy. The British economy also dropped in the manufacturing PMI reading.

The EUR to GBP rate is trading at the 0.8580 level with the pair still unable to get to the 0.8600 level.

German retail sales slump, manufacturing sector disappoints

German retail sales dropped by a greater amount than expected in July after seeing two months of stronger gains, data showed on Wednesday, in a sign that consumers in Europe’s largest economy might be tightening their belt ahead of the third quarter.

The Federal Statistics Office said retail sales dropped by -5.1% on the month after a revised jump of 4.5% in June and 4.6% in May. The July reading missed the Reuters forecast for a drop of only 0.9%.

Analysts now worry that the overall support for the economy from household spending will be lower in the third quarter than many had forecast.

German manufacturers were also struggling in August as supply shortages for raw materials and components continued to limit production and push up price inflation.

IHS Markit’s final Purchasing Managers’ Index (PMI) for manufacturing, dropped to 62.6 from 65.9 in July, with manufacturing accounting for 20% of the country’s economy.

That was the lowest number in six months but was still comfortably above the 50 level which marks the difference between expansion and contraction.

UK manufacturing activity slows, but beats expectation

UK manufacturing activity also slowed slightly in August as momentum in the sector was hit by the same supply chain issues and raw material shortages, IHS Markit said on Wednesday.

The UK manufacturing purchasing managers’ index decreased slightly to 60.3 points in August from 60.4 in July but was still ahead of the preliminary estimate of 60.1.

Rob Dobson, director at IHS Markit, said: “Severe disruptions to supply chains and raw material shortages eroded the growth momentum of UK manufacturing in August.”

“A wide range of factors contributed to the disruption, including port capacity issues, international shipping delays, the re-imposition of Covid restrictions at some key points in global supply networks, and ongoing issues post-Brexit. With all of these factors likely to persist in the coming months”.

The average UK house price increased by almost £5,000 in August despite the stamp duty holiday beginning to taper off.

Nationwide recorded a “surprising” 2.1% rise in prices, taking the average up £4,628 to £248,857. The monthly increase was the second largest increase in the past 15 years, surpassed only by a 2.3% increase seen in April.

Prices rose 11% in the year to August, far outstripping the cost savings that buyers have gained from changes to the stamp duty. Property prices are now 13% higher than they were before the pandemic, with some areas seeing much larger gains.

The post EUR GBP Higher Despite German Economic Data appeared first on Euro Rate Forecast.



Source: https://www.eurorateforecast.com/2021/09/eur-gbp-higher-despite-german-economic-data/


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