Are GBP/EUR Rates Heading Back Under 1.35? (Matthew Vassallo)

GBP/EUR rates have dropped by over 8 cents in the past two weeks, moving the pair away from the 8 year high. Poor economic data, including weak Manufacturing and worse than expected unemployment figures, has halted the Pound’s recent momentum.

A realignment was always likely when you consider how aggressive the Pound’s move was over the past couple of months. The Bank of England’s (BoE) were concerned that the Pound’s rising value would negatively affect UK exports. These fears were confirmed recently with UK factory orders falling to a 2 year low. The central bank have already indicated we will not be seeing a UK interest rate hike any time soon and I now feel it is unlikely that GBP/EUR rates will move back through 1.40 in the short-term.

Looking ahead and UK Retail Sales figures are released tomorrow and are expected to show an improvement. This could help the Pound find some support, although if figures are worse than expected then I anticipate the Pound’s slide to continue.

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