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Euro Exchange Rate: EUR to GBP Bolstered by Unhealthy UK Inflation Data


The EUR to GBP exchange rate is currently trending in the region of 0.8017, fluctuating between a low of 0.7980 and a high of 0.8024. Movement at this time is around 0.35% which is most likely to be the result of less-than-impressive UK inflation data.

Last week wasn’t ideal for the Euro. French, German and Eurozone Gross Domestic Product (GDP) data all fell below expectations, but the ramifications weren’t fully felt due to the overwhelming focus towards the Pound’s problematic journey. As the Pound began to regain a little strength, however, the Euro suffered from the string of poor GDP results.

Yesterday was a much better day for Sterling compared to the disastrous string of events last week. The aftermath of an interview given to the Sunday Times by Bank of England (BoE) Governor Mark Carney saw an upward surge in Sterling strength across the board. Carney suggested that the change in focus from unemployment to wage growth will not necessarily delay an interest rate hike, as he is willing to raise interest before wages are seen to grow.

Today there has been very little by way of European domestic data, not dissimilar from yesterday’s sparse docket. The data that has been released has no real weighting in terms of movement for the Euro.

In contrast the UK domestic data docket has had a couple of influential publications, but unfortunately they don’t make pleasant reading for those backing the Pound. The year-on-year Consumer Price Index has plunged from 1.9% to 1.6% despite having been forecast to dip to 1.8%. Not unlike busses bad news comes in two’s; Retail Price Index fell to 256.0 from 256.3 having been forecast to only decline to 256.2. This is very likely to have a serious detrimental effect on Sterling, not least by diminishing any recent gains. It also increases, once again, the likelihood that the baseline interest rate won’t be altered until 2015. Matthew Olney, writing for Future Currency Forecast, confirms this stating; ‘According to the Office for National Statistics (ONS), UK inflation cooled more than forecast in July, reducing the likelihood that the Bank of England will raise interest rates before the end of 2014’.

The Euro to Pound Sterling exchange rate has hit a low today of 0.7980.

Euro exchange rate Forecast

In terms of European domestic data things don’t heat up until Thursday. The German composite, manufacturing and services PMI’s will be of interest and are likely to spark Euro movement. They are all expected to drop from the previous figures. Similarly Eurozone composite, manufacturing and services PMI’s will be of significance. They are also all expected to dip from the previous figures posted. Another important event will be on Friday, which will see the European Central Bank President Draghi speak at Jackson Hole.

Tomorrow the Bank of England Minutes is likely to affect Sterling, not least because of the growing speculation that one of the policymakers voted for a rate hike in the near-future. Thursday’s year-on-year UK Retail Sales will also be of significance and are expected to decline.

The Euro to Pound Sterling exchange rate has hit a high today of 0.8024.