Euro to Pound Exchange Rate Losses Caused by Dovish ECB Minutes
Last week saw a slump in the Euro to Pound exchange rate, from a high of 0.8737 on 11th April to an 11-month low of 0.8629 on 13th April.
The Euro’s sudden devaluation was caused by European Central Bank (ECB) accounts from the latest monetary policy meeting.
The text showed that ECB officials were in no hurry to adjust monetary policy, which disappointed Euro traders and led to a rapid depreciation for the single currency.
Pound to Euro Exchange Rate Struggled after Slowing UK Output Stats
The prior late-week GBP/EUR exchange rate gains were mainly down to the Euro weakening, rather than any especially supportive UK data coming out.
UK data showed that levels of month-on-month industrial and manufacturing production had slowed in February, along with annual construction output levels.
Weekly Euro to Pound Exchange Rate Forecast: Chance of EUR/GBP Recovery on Eurozone Inflation Acceleration
The Euro could break out of its recent poor trading against the Pound in the week ahead, as a number of positively-predicted Eurozone data releases are due out.
First up will be 17th April’s ZEW Eurozone economic sentiment index for April.
This is predicted to show growth from 13.4 points to 21.3, which will signify rising economic optimism and could lead to a Euro rise.
The main event will be 18th April’s final inflation rate readings for March, which are expected to show higher levels of base inflation on the month and the year.
A forecast-matching annual rise from 1.1% to 1.4% will not meet the European Central Bank’s (ECB) 2% target, it would still be a step in the right direction.
Inflation getting closer to the target range increases the chances of an ECB interest rate hike, an outcome long-awaited by Euro traders.
The coming week may close on a slight negative note for the Eurozone, leading to a late-week Euro to Pound exchange rate decline.
April’s consumer confidence flash, out on 20th April, is expected to show a slip from 0.1 points to -0.3.
The reading has remained on 0 points or higher since November 2017, so a drop back into the negative range might lower confidence among Euro traders.
Compared to Eurozone releases, this week’s UK data is expected to be more negative than positive overall. As a consequence, the Pound might decline against the Euro.
The UK unemployment rate could rise from 4.3% to 4.4% on 17th April, which would be a move away from the current near-record low level.
Additional damage could be caused by average earnings data for February, should it show slowing levels of wage growth. These ecostats will be out on the same day.
Any wage growth slowdown will be directly compared to 18th April’s inflation rate data, should it show higher rather than lower inflation levels.
Faster inflation and slower wage growth could trigger a GBP/EUR exchange rate decline, as it would mean continued wage squeeze conditions.
The saving grace for the Pound to Euro exchange rate could be 19th April’s retail sales results for March, which are forecast to show growth compared to March 2017.