GBP EUR Gains After Weaker German Retail Sales
The GBP EUR exchange rate was higher on Monday by 0.50% after retail sales for Germany came in lower than expected. There was also some softness in the final PMI data for Italy and Spain. The PMI data for Germany and the UK matched previous expectations.
The GBP to EUR traded at 1.1966, aiming for the 1.2000 level.
German retail dropped at the sharpest rate since 1980
Germany pressured the euro once again after retail sales fell sharply in June. The figures were lower by 9.8% from the year previous, which was the fastest drop since 1980.
Food sales decreased by 7.2% for the year, while internet and mail order sales dropped 15%. Record inflation leads to consumers cutting non-essential spending, and items such as furniture and household appliances were big losers. As we saw with the Australian and UK numbers, summer travel may also be a culprit in the latest figures.
The European manufacturing sector showed a decline as new orders dried up. Chris Williamson, Chief Economist at S&P Global Market, said of the PMI data that Eurozone manufacturing sunk into a progressively steep downturn, increasing the region’s risk of recession. With the exclusion of the pandemic, new orders fell at an alarming pace, the steepest since the debt crisis of 2012 with worse anticipated.
Production fell at particularly worrying rates in Germany, Italy and France. However, it is also currently in decline in all other surveyed countries with the exception of the Netherlands, where growth rate is slowing markedly. European employment came in as expected at 6.6% for June.
Pound sterling helped by weaker expansion in PMIs
PMI figures for the UK supported the pound sterling, which aligned closely with expectations. The 52.2 print was still in expansion territory but showed signs of reversing.
British manufacturers saw the first drop in output in over two years last month, with new orders and export business suffering a decline.
However, the key European nations are below the 50 level, separating expansion from contraction and helping lift the sterling.
Elsewhere, British households are under pressure with the ongoing cost-of-living crisis. More than one in eight homes fear they have no further cuts available in spending to afford the coming hike in energy bills.
Poorer families are the worst affected, with over a quarter of households earning less than £20,000 struggling to cope with higher bills. Families in Yorkshire, the southwest and Northern Ireland are the most worried, according to a Legal & General survey of 20,000.
Nigel Wilson, chief executive of Legal & General said that some areas of the UK felt the cost-of-living crisis being more severely, threatening to widen the current demographic and geographic inequalities.
Nationwide house prices will release for the UK on Tuesday with 11.5% y-o-y expected.
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The post GBP EUR Gains After Weaker German Retail Sales appeared first on Pound Sterling Forecast.
Source: https://www.poundsterlingforecast.com/2022/08/gbp-eur-gains-after-weaker-german-retail-sales/
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