The Euro Pound (EUR/GBP) exchange rate has strengthened throughout the day on the back of preliminary Eurozone inflation figures released earlier this morning.
At the time of writing the EUR/GBP pairing are trending around the £0.8589 level as the Pound weakens on a lack of notable economic data.
Euro (EUR) Supported by Flash Eurozone Inflation Data
The Euro has found itself pushing higher across the board today following the release of preliminary inflation figures from the Eurozone for August.
Eurozone inflation rose to 3% on the year as the bloc recovers from the worst of the coronavirus pandemic, a 10-year high.
Bert Colijn, economist at ING commented on the flash inflation figures, and what they could mean moving forward:
‘Headline inflation at 3% has not been seen since 2011. The elevated headline rate was due to the higher core rate and continued year-on-year growth in food as well as energy prices.’
‘The latter has been somewhat of a surprise in recent months, related to higher gas prices and continued growth in petrol prices despite Brent oil prices starting to level off. This has the potential to push headline inflation higher towards year end.’
‘Despite the jump in core inflation and the further rise in headline inflation, this is not set to sway the ECB towards a more hawkish stance ahead of the September meeting next week.’
Further supporting the appeal of the single currency today has been a further fall in the German unemployment level to 5.5%, a new pandemic low.
Pound (GBP) Limited on Absence of Notable Data
The Pound has been limited for much of the day on an absence of notable economic data from the UK.
It comes as a rise in coronavirus cases and deaths across the UK begins to worry investors and the public alike regarding the country’s recovery from the pandemic.
Dr Ami Jones from the Aneurin Bevan University Health Board commented on the problems the NHS are currently facing in Wales, saying:
‘We have people in our ITU who are very poorly right now who didn’t get vaccinated but now wish for nothing more than to be able to turn back the clock and get their vaccine. We are all working very hard – we are keeping elective operations going and still running very busy emergency departments and wards.
‘The staff are feeling pretty demoralised that Covid is once again filling their wards and their ITUs, especially when so many hospital cases could’ve been prevented by vaccination.’
Euro Pound Exchange Rate Outlook: Manufacturing PMI in Focus
For both the Euro and Pound, the latest manufacturing PMI from the currencies respective economies is expected to drive movement in the pairing tomorrow.
More so, the latest German retail sales figures could provide an additional boost to the single currency.
The EUR/GBP pairing will continue to be driven by any further coronavirus developments in the coming days.