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Pound Euro Exchange Rate Rises as Eurozone Wage Growth Falls Below Forecasts

Published: 17 Jun at 5 PM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Forex, Euro Crisis, UK, Exchange Rates, Inflation, Pound Euro Exchaneg Rate,

The Pound Euro exchange rate rose today despite the latest Eurozone inflation gauge for May confirming forecasts and rising by 0.2%. The pairing is currently trading around €1.16.

Analysts at Reuters commented:

‘A sharp spike in energy prices and more expensive services boosted euro zone consumer inflation in May as expected … taking the rate of price growth just above the European Central Banks target.’

However, the Euro has struggled from a weaker-than-expected Eurozone wage growth figure, which slowed to 2.2% in the first quarter of this year, below forecasts of a 4.6% increase.

The Governor of the Central Bank of Ireland, Gabriel Makhlouf, also warned of a downward pressure on businesses and mortgage borrows if fiscal support was prematurely tapered.

Makhlouf said that the Irish economic recovery could be ‘bumpy and uneven’.

The Euro has also struggled from its negative-correlation with the US Dollar today. USD has risen following hawkish comments from the US Federal Reserve, limiting the single currency.

Meanwhile, the Pound (GBP) rose against EUR despite a lack of UK economic data today.

Instead, Sterling investors are awaiting the latest UK retail sales data for May, due for release tomorrow.

The outlook for the UK remains generally positive, despite Prime Minister Boris Johnson’s recent announcement of a delay to the easing of lockdown restrictions this month.

Looking ahead, tomorrow will see the release of May’s latest UK retail sales data.

Any indications of a recovering UK retail sector would boost the Pound. However, if UK Covid-19 cases continue to rise, then the Pound Euro exchange rate would fall.