The Euro (EUR) continued its upward trend against the British Pound (GBP) for the third consecutive day on Thursday, trading at 0.8575 after reaching intra-day highs near 0.8580 during Asian trading. However, the pair edged down from session highs at the European open, despite the release of stronger-than-expected German GfK Consumer Confidence data for September. The GfK index improved to -26.6 from -29.4 in August, surpassing market expectations of a decline to -29.6. The Nuremberg Institute for Market Decisions attributed this improvement primarily to a significant increase in income expectations and a slight decrease in the willingness to save, while economic prospects also showed positive development. Willingness to buy, however, remained largely unchanged [1].
German macroeconomic data further supported the Euro, with GDP figures for the previous quarter revised up to 0.3% quarterly growth, matching the first quarter's expansion. Yearly GDP growth was also revised to 1%, higher than the previously estimated 0.9% and more than double the 0.4% growth seen in the prior quarter. Additionally, the IFO Business Climate Index reached its highest level in the past 12 months, with both the current business assessment and economic expectations sub-indexes exceeding forecasts, bolstering investor confidence in Germany's economic outlook [1].
In contrast, the UK economic calendar has been largely empty this week, and the Pound has weakened against most major currencies. The GBP/USD pair is on track for a 0.4% weekly decline, contributing to Sterling's underperformance. Investors are awaiting the Jackson Hole Symposium for further guidance on the Federal Reserve's monetary policy. Rabobank strategists noted that the market still perceives some risk of higher rates this year, but a steady policy stance, which aligns with their view, could undermine the Pound. Rabobank maintains a three-month EUR/GBP forecast of 0.87 [1].
CONCLUSION
Despite upbeat German consumer confidence and positive macroeconomic revisions, the Euro trimmed gains against the Pound, reflecting cautious market sentiment. The lack of UK economic data and anticipation of the Jackson Hole Symposium have contributed to Sterling's weakness. Analysts suggest that a steady policy outlook could continue to weigh on the Pound in the near term.