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Euro (EUR) Exchange Rate Weakens Against Pound (GBP) and US Dollar (USD) on German Data

The Euro (EUR) declined against the Pound (GBP) and US Dollar (USD) to hover around two-year lows as concerns over the Eurozone economy were exacerbated by the release of disappointing GFK Consumer Confidence from Germany.

The report published by GFK showed that its German consumer climate index fell more than forecast to 8.3 in September from the reading of 8.6 seen in the previous month. Economists had been forecasting that the index would slip to a reading of 8.5.

The decline in the index was being blamed on consumer concerns over the impacts of the Ukraine conflict and worries over the escalating conflict in the Middle East.

‘In the eyes of consumers, ongoing geopolitical tensions are now also threatening to affect the economy in Germany. In addition, it has led to a drop in optimism. As a result, income and economic expectations, as well as a propensity to spend have fallen across the board,’ GFK said following the release of the report.

The decline in the consumer climate index was the second seen in successive months.

The falling consumer confidence figures are in line with deteriorating business confidence in Germany. Earlier this week Germany’s Ifo Institute said its main indicator fell to 104.7 in September from 106.3 in August, hitting the lowest level since April 2013. The report suggested that the German economy is unlikely to return to strong growth as it struggles to rebound from an economic contraction in the second quarter.

Also weighing upon the Euro was Thursday’s comments made by European Central Bank (ECB) President Mario Draghi who reiterated his pledge that the central bank will take action to boost inflation across the Eurozone.

“We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation,” Draghi said.

The comments increased speculation that the ECB could be getting closer to introducing a quantitative easing programme. If such a measure is introduced the Euro will fall further due to the diverging policies of the ECB and other major central banks such as the Bank of England and the USA’s Federal Reserve.

Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast

The Euro could see the pace of its losses slow later in the session, as the markets grow concerned that the British Government will vote in favour of launching airstrikes against the Islamic State. An escalation in the Middle East conflict is creating jitters throughout the markets.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast

The Euro is forecast to fall further against the US Dollar as the market awaits the release of the latest US economic data. Second quarter economic growth figures are due to be published as is a report by the University of Michigan on consumer sentiment.

If those reports comes in strongly we can expect the ‘Greenback’ to advance further against the Euro and other major peers.

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,1.2742 ,
Euro,,British Pound,0.7809 ,
Euro,,Australian Dollar,1.4510 ,
Euro,,Canadian Dollar,1.4154 ,

As of 11:40 am GMT