Pound euro exchange rate (GBP/EUR): Sterling seeks to regain lost ground after retail sales slump
However, any downside to the pound euro exchange rate has been guarded by some arguably more significant GDP flops from the Eurozone.
At 10:00 in London the pound to euro exchange rate is trading unchanged on last night's close at 1.1908.
Please keep in mind all quotations here are inter-bank spot rates. Your retail rate will be delivered with a spread being subtracted by your bank at their discretion. This is a competitive market though and the good news is that an independent FX provider will seek to beat your bank's rate, thus delivering up to 5% more FX. Please learn more here.
UK retail sales flop, British pound slumps
We warned that the UK currency would react badly to any negative surprises; when today's retail sales figures were released the sell buttons were pushed.
Retail Sales (YoY) (Oct): +1.8% vs +3.1% expected.
Retail Sales (MoM) (Oct): -0.7% vs 0% expected.
Retail Sales ex-Fuel (MoM) (Oct): -0.6% vs -0.2% expected.
Retail Sales ex-Fuel (YoY) (Oct): +2.3% vs +3.1% expected.
The comeback in GBP/EUR in the half hour following the data release suggests markets are happy with 1.19 as a touchstone for this pair.
After UK inflation figures drove the GBPEUR rate below 1.19, upside surprise in claimant count figures as well the BoE inflation report helped the pound to recover previous losses.
"Whether these levels can be sustained today, will be difficult considering the bad retail sales number. On the other hand, poor eurozone GDP data may give investors a reason to sell the euro," says Sasha Nugent at Caxton FX.
Looking ahead, Piet Lammens at KBC Markets is bullish on the sterling's prospects: "The short-term technical pictures of EUR/GBP and cable suggests that the downside in sterling is well protected. The testimony of Fed’s Yellen (see FI section and EUR/USD) is a wild card for
trading today."
Euro dollar exchange rate struggles
Remember to keep an eye on the more liquid EUR/USD rates - as we move away from the UK monthly economic reports external factors such as happenings in this headline rate will help determine GBP/EUR moves.
Price action in the EUR/USD was subdued right until in the final hour of last night's trading session when EUR/USD shot 20 ticks higher to near 1.35.
"The trigger was the written comment of Yellen. It didn’t, we think, contain surprises. She is not yet satisfied by the stance of the economy, who would have thought she was?, but confirmed that the Fed’s strategy needed to be sustained (she was one of the architects)," says Lammens.
Nothing really new, but for the market is was enough to push Treasuries higher and push the dollar lower.
However, it occurred in very thin final dealings. Overnight, the pair is again somewhat lower.