The Euro has climbed further against the Pound on Monday afternoon, thanks to negative US news. Having opened around 0.8765, the EUR GBP exchange rate has since climbed to 0.8783 thanks to worse-than-forecast US production stats.
When it was reported that the Empire State manufacturing index fell from 19.8 points to 9.8, the US Dollar was weakened, pushing the Euro up against the Pound.
[First published 11:28, July 17th, 2017]
A step back in Eurozone inflation has put the Euro near a monthly low against the Pound. The EUR GBP exchange rate has been tight, with the Euro just managing to post a gain up to 0.8765 against the Pound.
- EUR GBP rate rises to 0.8765 – GBP EUR trades down at 1.1405
- Euro weakened as inflation rates slow – Lower chances of near-term ECB policy action
- Pound affected by continuing Brexit talks – David Davis pledges focus on citizens’ rights
- Euro could recover on ZEW confidence scores – Pound rally possible on high inflation
The Euro’s trading against the Pound has been the worst exchange rate since late June, 2017. This has mainly been caused by pessimistic trader forecasts.
Euro Advances despite Background Concerns on Eurozone Inflation
The Euro has posted a marginal gain against the Pound today, despite a 0% rate of inflation in June. Annually, Eurozone inflation has additionally slowed from 1.4% to 1.3%.
Commenting on the result has been Societe General economist Anatoli Annenkov. Focusing on how the ECB might react to lower inflation, Annenkov has said;
‘Striking a balance between the weak inflation outlook, above-potential growth and the credibility of instruments remains a major communication challenge for the ECB, with ample room for ambiguity affecting markets’.
If inflation continues to fall away from the ECB’s 2% target, the odds of a Euro-boosting interest rate hike will also decrease.
Brexit Talks Bring Cautious Optimism among Pound Traders
Sterling’s dip against the Euro comes despite the GBP EUR exchange rate being near a 1-month high.
The latest UK news has focused on Brexit, with talks in Brussels resuming for their second round.
After the first set of talks raised the issue of EU citizens’ rights in the UK, Brexit Secretary David Davis has since pledged to make the issue a priority.
This increases the possibility that the issue could be resolved amicably, which may see following Brexit discussions proceed smoothly.
EUR GBP Forecast: Euro may Rise on Strong Eurozone Confidence Stats
Eurozone data on Tuesday will consist of ZEW economic sentiment indexes for July. The Eurozone result is forecast to rise, but a German decline is also predicted. If the high-impact German result rises against forecasts, the Euro could recover against the Pound.
Following today’s Eurozone inflation rate stats, Tuesday will bring UK inflation figures for June. Annual inflation posted 2.9% in May and a reprint is forecast for June as well. The Bank of England (BoE) target is 2%, so if inflation remains above this then it would give policymakers further incentive to vote for an interest rate hike.
Such an outcome could push the Pound’s value up, especially when combined with policymaker divisions about monetary policy.
Current Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8765 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1405.