The British pound is lower against the euro on Monday.
- The euro jumped alongside stock markets which were led higher by big gains in Chinese shares.
- China stock markets rose 5% on the day with the highest volume of trading since 2011
- Eurozone retail sales for May rose faster than predicted
- UK Construction PMIs rebounds into expansion in June
GBP/EUR was lower by 61 pips (-0.55%) to 1.1044 as of 3pm GMT. The Pound-euro exchange rate rose +0.95% last week.
The currency pair briefly touched 1.11 before turning lower on the day, eventually finding support just under 1.105. On Friday the exchange rate had been little changed at -0.06%.
GBP: UK construction rebounds in June
It was the euro rather than the pound benefiting from the high spirits shown by investors on Monday. The Shanghai Composite, China’s benchmark share index rose 5.7% for its biggest one-day gain since 2015. The CSI 300, another widely followed China shares index finished at 5-year highs.
As the US dollar dropped, the euro rallied but the British pound (GBP/USD) was hobbled by selling at the 1.25 round number.
An improvement in UK construction activity in May helped cushion the pound from deeper losses. The UK June construction PMI reached 55.3 versus the 46.0 expected. Commenting on its finding, research firm Markit noted: “June’s survey data revealed a steep rebound in UK construction output as more sites began to reopen and the supply chain kicked into gear. House building led the way with the fastest rise in activity for nearly five years.”
EUR: Eurozone retail sales pickup after lockdown easing
The euro brushed off some initial disappointment that factory orders in Germany expanded at a slower pace than expected. Order rose orders rose +10.4% when a rise of +15.4% m/m had been expected. Looking at the year-over-year figures gives a better flavour of how depressed activity remains versus pre-pandemic levels. German Factory orders in May fell -29.3% versus the -24.0% y/y expected.
Retail sales rebounded strongly in the Eurozone in May when lockdown restrictions were eased in most European countries. Sales rose +17.8% when a rise of +15.0% month-over-month was expected. Again on annual basis, sales remained subdued -5.1% year-over-year.
