GBP/EUR: Pound Steady vs. Euro As Angela Merkel Steps Down
  • Euro (EUR) set to shed 1.5% across the week
  • French & German Q3 GDP beat forecasts, but more recent German retail sales dropped -2.2%
  • US Dollar (USD) edging lower after strong week of gains
  • US personal spending data in focus

The Euro US Dollar (EUR/USD) exchange rate is moving lower on Friday extending losses for a fifth straight session. The pair settled -0.6% lower on Thursday at US$1.1674. At 07:15 UTC, EUR/USD trades -0.05% at US$1.1670 after paring earlier losses. The pair is on track for weekly losses in the region of 1.5% after 1.2% gains last week.

The Euro has been trading on the back foot across the week as covid cases have surged a lockdown measures on the old continent have tightened. Earlier in the week France and Germany almost simultaneously announced national lockdown restrictions which will hamper the economic recovery, if not completely derail it.

Data from the Eurozone has been mixed. GDP data from both France and Germany has exceeded expectations. France experienced Q3 economic growth of 18.1% after a record-breaking contraction of -13.4% in the second quarter. Germany also outperformed in the July – September period expanding 8.2% better than the 7.3% GDP growth forecast after a record breaking -9.7% contraction in the second quarter.

However, this data almost feels out of date given recent developments. German retail sales for September showed a deeper than expected slowdown -2.2%, after jumping 3.1% in August. French household consumption was also sharply lower in September as lockdown restrictions tightened. Attention will now turn to Eurozone GDP due later today.

The ECB kept interest rates unchanged yesterday, but also highlighted that the economic fallout from the second covid wave has damaged the outlook.

The US Dollar is trading mildly lower versus its major peers on Friday after strong gains across the week as investors sought its safe haven properties. US election jitters are starting to show through with just days to go until the November 3rd voting day.

Attention today will be on US personal spending data. The figure comes after data yesterday showed that initial jobless claims  fell to 751,000 less than the 778,000 expected.