GBP in 'appalling' condition against the EUR

The pound to euro exchange rate is marginally down on Friday night's closing rate, at 10:30 in London GBP-EUR is at 1.1557.

Please note that the above is a wholesale market quote - your bank will affix their own discretionary spread to the number. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please find out more here.

"Sterling continues to struggle against the euro at the start of a week where we will learn how the new Bank of England Governor Mark Carney voted on quantitative easing earlier this month (Wednesday)," says Richard Driver at Caxton FX.

Driver doesn't mince his words when he notes, "sterling is still in pretty appalling shape against the euro but the release of the MPC minutes could well be the catalyst for a bounce in the rate. We are expecting Mark Carney to have voted against the introduction of further QE (for now), which will be a plus point for the pound if we are correct.

"This pair is trading close to €1.1550 and we still see plenty of scope for another move lower over the next couple of sessions."

Technically speaking…

Luc Luyet at MIG Bank has consulted the EUR-GBP charts to try and ascertain where this pair is headed; it would seem the euro is likely to maintain the upper hand from here:

"EUR/GBP is moving above its resistance at 0.8637 (17/04/2013 high) but struggles to hold above it, indicating a very volatile price action.
Given the recent new highs, a short-term bullish bias is favoured as long as the hourly support at 0.8575 (10/07/2013 low) holds. An hourly
resistance can be found at 0.8694 (11/07/2013 high). Another resistance is at 0.8794 (12/03/2013 high)."

BRC Retail Sales data paints a sunny picture

Turning to the fundamental data picture we see there has actually been a great deal of support for sterling.

Retail sales in the UK were helped by the warmer weather in June (2013), rising by 1.4 pct, according to new figures by the British Retail Consortium.

The high street has received the biggest boost as shoppers return to traditional shopping sites with sales on the high street up by 1.4 pct in June, compared to a 0.6 pct increase in sales at out of town retail parks.

By contrast, sales in shopping centres were down by 3.0 pct. Overall there was a 0.1 pct increase in footfall across all shopping sites compared to June 2012.

This is important as we face official retail sales data on Thursday morning.

Barclays say:

"Core retail sales are expected to rise modestly by 0.2% from the sharp increase of 2.1% in May. We expect a flat print of 0.0%."

House prices at record high    

Also providing fundamental support for the British pound is news that house prices soared to record levels in July.

Property portal Rightmove says the average price rose 0.3 per cent month-on-month and 4.8 per cent year-on-year to £253,658.

This is the seventh consecutive monthly rise, the report said.

“The market is currently benefiting from the ‘aggregation of marginal gains’ where incremental improvements across a range of key market drivers compound to slowly but surely build momentum,” said Miles Shipside, Rightmove director and housing market analyst.