The Euro to GBP exchange rate was trading slightly firmer on Friday as the single currency continues to be resilient as a result of broader flows of cash into Europe.
The currency’s strength has surprised many economists as it seems to continuously shrug off grim news out of the Eurozone. Weak inflation continues to be a major issue for the currency bloc and this week’s data releases did little to ease concerns over the problem.
Data released yesterday showed that consumer prices dropped by 1.3% in Greece last month and on an annual basis prices declined in Spain and Portugal. Today data out of Germany showed that inflation in the Eurozone’s largest economy hit multi-year lows in March.
According to the German Statistics Office, prices increased by 0.3% on a monthly basis in March, but rose by just 0.9% on an annual basis. The report confirmed the estimates published two weeks ago. The 0.9% figure marks the first time that the harmonised inflation rate has fallen below 1% since mid 2010.
The European Central Bank’s inflation target of just fewer than 2% seems to be getting further away from being achieved. The risk of deflation seems to be rising across the region despite ECB policy makers saying that they don’t see deflation in the currency bloc.
ECB President Mario Draghi yesterday reiterated the comments made at last week’s news conference. He told an audience in Washington DC that the ECB council will keep interest rates at record lows and did not rule out the use of monetary easing policies.
Next Wednesday will see the publication of Eurozone wide inflation data which is expected to show that inflation across the region fell from 0.7% to 0.5% on a yearly basis. A weaker than expected figure will see the Euro fall as concerns are sure to be heightened.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3885 ,
Euro,,British Pound,0.8283 ,
Euro,,Australian Dollar,1.4769 ,
Euro,,Canadian Dollar,1.5171 ,