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EUR/GBP & EUR/USD Exchange Rates Forecast: Single currency softer ahead of Christmas Week

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The Euro to Pound (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates softened on Friday as positive economic data out of Germany and the wider Eurozone was countered by concerns over next week’s second Greek Presidential vote.

Early in the session, the Euro firmed against the Pound and other peers as data out of Germany showed that consumer sentiment in the Eurozones largest economy improved to its best level in eight years as German shoppers expect the nation’s economic situation to improve next year.

The sentiment index compiled by market research group GfK rose from the previous months reading of 8.7 to 9.0, the highest figure seen since December 2006 and was higher than economist forecasts for a figure of 8.8.

‘Evidently consumers currently assume that the phase of economic weakness in Germany will be temporary and are expecting their domestic economy to return to growth over the coming months,’ GfK said a statement.

Producer Price inflation (PPI) in the nation also came in better than forecast. Month on month PPI stagnated at 0%, a better figure than the drop of -0.2% forecast by economists. On an annual basis PPI fell by -0.9%, a slower decline than the -1.1% expected.

Data out of the Eurozone showed that the Eurozone’s current account surplus shrank slightly in October but shrank less than expected. The region reported a surplus of €20.5 billion in October, down from €32.0 billion in September, while the surplus for goods fell to €19.3 billion in October from €21.6 billion. The services surplus narrowed to €5.5 billion from €10.4 billion.

The Pound meanwhile remained trading above the 1.27 level after it found support from data, which showed that British retail sales growth accelerated at its fastest pace in close to 26 years in the month of December.

‘The strongest sales growth for a quarter of a century is a big boost for retailers as they head towards the climax of the crucial pre-Christmas trading period. Black Friday price-cuts, embraced more widely by more UK retailers than ever, and discounting played an important part in helping sales, encouraging more customers into stores and online to buy more widely,’ said Barry Williams, CBI Distributive Trades Survey Chairman.

The data compiled by the Confederation of British Industry (CBI) contrasted with a GfK consumer confidence report, which showed that UK consumer sentiment fell more than expected in December.

The US Dollar meanwhile is continuing to receive support from expectations that the Federal Reserve will raise interest rates by April next year.

Euro Exchange Rate News:

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.2247 ,
Euro,,British Pound,0.7834 ,
Euro,,Australian Dollar,1.5049 ,
Euro,,Canadian Dollar,1.4222 ,

As of 16:20 pm GMT