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Euro to Pound Exchange Rate Trades Tightly after Eurozone Inflation Nears 2%

The Euro has recovered against the Pound today, rising to 0.84 in the EUR GBP exchange rate.

Eurozone data showed annual inflation rising to 1.9% in April, which brought it back up to the European Central Bank (ECB) target of 2%.

Additional support has come from Belgium GDP growth, which has risen on the quarter and year in Q1.

UK GDP figures have also been notable, showing a larger-than-forecast Q1 quarter-on-quarter slowdown to 0.3%. Despite this concerning result, the Pound still remained in demand on upgraded bank forecasts for Pound to Dollar trading.

(Last updated 16:55, April 27th, 2017)

The Euro has dropped further against the Pound today, nearing an exchange rate of 0.83 after the European Central Bank (ECB) press conference.

Although ECB President Mario Draghi largely repeated previous comments, he notably offered a mixed picture on inflation and policy outlook. Despite declaring that the Eurozone was recovering well, he also stressed that no monetary policy changes were likely in the near-term.

This worsened prior Euro losses, pushing it to fresh daily lows against the Pound.

(First published 12:36, April 27th, 2017)

On an action-packed day for the Euro, the EUR GBP exchange rate has fallen ahead of April’s European Central Bank (ECB) interest rate decision.

  • EUR GBP rate drops to 0.84 – GBP EUR rate climbs to 1.18
  • Euro slumps ahead of ECB event – Rising confidence countered by election concerns
  • Sterling rallies on retail activity – Warnings of worse results next month
  • ECB press conference imminent – Will ECB’s Draghi warn of French election fallout?

Eurozone news has been positive today, with German and Eurozone-wide confidence scores exceeding forecasts.

Overall, however, the Euro has fallen after a negative development on Emmanuel Macron’s French Presidential election trail.

In his hometown of Amiens, Macron was booed by factory workers due to his perceived indifference to the factory’s closure. The workers had been visited earlier by Macron’s rival, Marine Le Pen, who had promised to keep the factory open. By comparison, Macron could only offer a good termination deal.

While a relatively minor incident, it has raised concerns that Macron could struggle to win over working class French citizens. If this is the case, it could grant an advantage to the populist, anti-EU Le Pen.

The Euro has also fallen due to the imminent European Central Bank (ECB) press conference, delivered by ECB President Mario Draghi.

Amid the ongoing French election, Draghi is not expected to ‘rock the boat’ with any radical policy adjustments. Draghi could still panic traders, however, if he indicates that a Le Pen victory is considered a threat to the Euro and Eurozone.

The Pound’s climb to 1.18 against the Euro is the best rate of the week, although GBP EUR closed higher last week at 1.19.

Sterling’s surge comes from the Confederation of British Industry (CBI) retail sales figure, which rose far above forecasts from 9 points to 38.

There have been a few caveats behind the news, the first being that only 112 companies were surveyed. Additionally, the CBI’s forecast is for a drop back down in May.

Pantheon Macroeconomics economist Samuel Tombs had the last cautionary word;

‘The CBI’s retail sales [stat] surged in April because it isn’t calendar-adjusted. It’ll be a poor guide to official data, which adjusts for Easter’.

Along with the ECB conference, the EUR GBP exchange rate could also be moved by Germany’s inflation rate figure.

Covering April, a year-on-year rise from 1.6% to 1.9% is predicted. This could restore confidence in the Eurozone, pushing Euro demand up at the same time.

The last weekly Pound movement will come when Friday’s first quarter GDP growth rate stats are released. A quarterly slowdown is expected alongside an annual rise. If the yearly figure drops unexpectedly, then the Pound could end weekly trading in a decline against the Euro.

Current Interbank EUR GBP Exchange Rates

At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading down at 0.84 and the Pound to Euro (GBP EUR) exchange rate was trading up at 1.18.