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Euro to Pound (EUR/GBP) Exchange Rate Weaker as Sterling Boosted by Inflation Report


The Euro to Pound exchange rate edged lower on Tuesday as investors favoured Sterling following the release of UK consumer price inflation figures.

The inflation report showed a faster-than-forecast acceleration in annual consumer prices in April and the Pound was buoyed as a result.

Consumer price inflation advanced by 1.8 per cent in April, year-on-year, increasing the odds of the Bank of England increasing interest rates before next year.

This morning separate data revealed a slump in German producer prices.

Producer prices in the Eurozone’s largest economy dropped by 0.1 per cent in April month-on-month and were down 0.9 per cent on the year.

Of course the expectation that the European Central Bank will introduce additional stimulus when it meets next month is also keeping the Euro under pressure.

The common currency was putting up a pretty feeble fight against most of its major rivals as investors debated the likelihood of the ECB going with a rate cut, a negative deposit rate or a bond buying scheme.

Comments issued by ECB board member Yves Mersch also weighed on the Euro. Mersch implied that the central bank has the necessary tools for loosening monetary policy and that it is prepared to use them.

According to recent reports, the ECB is contemplating making its interest-rate setting meetings six-weekly rather than monthly – a change which would help the central bank with its policy making decisions.

These latest rumblings reflect comments made by ECB President Mario Draghi in April.

Draghi stated that ‘the frequency of our meetings leads the public and the market to expect action. Together with the publication of the minutes and with the need to avoid triggering short-term market noise, I think the Governing Council may consider to reflect on the frequency [of meetings].’

The Euro spent much of Tuesday in a weaker position against the US Dollar and close to a three-month low against the Yen.

Considerable market movement may be on the cards tomorrow due to the fact that UK retail sales and Eurozone consumer confidence figures are scheduled for publication.

Consumer confidence in the 18-nation currency bloc is expected to have declined by 8.6 per cent in May. If this proves to be the case the Euro could extend declines.

Of course the minutes from the most recent Bank of England policy meeting will also be of considerable interest.

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,1.3702,
Euro,,British Pound,0.8137,
Euro,,Australian Dollar,1.4791,
Euro,,New Zealand Dollar,1.5951,
Euro,,Canadian Dollar,1.4913,

As of 13:00 GMT