GBPEUR Tests July Highs after German Consumer Data
The GBPEUR exchange rate was higher on Wednesday with the pair testing the mid-July highs above 1.1750. German consumer confidence stagnated for the month despite analysts’ expectations for a rise. The UK also saw housing prices released with a slower than expected yearly increase in prices.
The GBP to EUR trades at 1.1745 and is relatively flat after the data with German unemployment and inflation due on Thursday.
German consumer confidence stays stuck in July
After the recent strength in consumer confidence, the index stayed stuck at the same level in July. Both economic and income expectations showed moderate losses, while the desire to buy may be increasing slightly. GfK forecast a -0.3 point change in consumer sentiment in August, the same value as in July of this year.
Rolf Bürkl, a GfK consumer expert said: “The phase where the decrease of COVID-19 incidence of infection has come to an end and those figures are again on the rise. In addition, the momentum for vaccination has recently slowed down considerably, despite there being sufficient quantities of the vaccine available. This is currently preventing any further significant increase as it pertains to consumer sentiment.”
Bürkl added: “Despite the current stagnation of consumer confidence, the domestic economy will make a positive contribution to overall economic development in the second half of the year. Consumers with full wallets will also ensure that this happens.”
The comments are positive despite the recent surge in virus cases, and it is not assured that those consumers will have the freedom to spend.
But the UK’s recent reopening and the resulting drop in cases is hopeful for the Eurozone after they reported that 70% of the continent has now had at least one vaccine shot.
UK house prices post a drop for the month with stamp duty
Britain’s house price index fell in July after the coronavirus emergency tax break was reduced at the end of June but demand for larger homes due to the pandemic is likely to support the market, according to the Nationwide mortgage provider.
The monthly house price index fell by 0.5% in July, which was the first fall since March, slowing down the annual gain to 10.5% from June’s improvement of 13.4% which was the largest increase in 17 years.
Robert Gardner, chief economist at Nationwide said the clamour to qualify for the higher tax break meant that savings from the incentive had been dwarfed by the increase in house prices.
Under the scheme the first £500k of a property in England or Northern Ireland was exempt from stamp duty tax until the end of June. A £250 tax-free allowance is now in force until the end of September.
The GBP versus the EUR rate will now look to test the yearly highs at 1.18 and there is high-level economic data today with the latest German unemployment and inflation data.