EUR/GBP Uninspired on Light Data Day
Friday’s only datasets were unable to influence movement in the EUR/GBP pair and it remains around the day’s opening levels of 0.7970.
The data included February’s Eurozone trade balance, which showed a disappointing surplus of 20.2b despite forecasts of 21.5b.
A weak Euro suffered no losses against the Pound however, as British construction output data also printed at a poor 0.3%.
Investors are now looking ahead to next Thursday’s European Central Bank (ECB) announcement, which is sure to cause EUR/GBP movement after March’s shocking policy decisions.
EUR/GBP Flat on Dull BoE Decision, ‘Brexit’ Warnings
A good week for the Pound (GBP) has left the Euro (EUR) trailing. Although the common currency gained slightly on positive CPI results for the Eurozone, the scores were not enough to spark a longer rally.
The rate of annual inflation in the currency bloc climbed to 0.0% in March, defying expectations for a reading of -0.1%. Although hardly a strong revival in inflation, the European Central Bank (ECB) will be reassured that CPI is moving in the right direction.
The Bank of England (BoE) also announced a unanimous decision to keep the key UK interest rate at 0.50%.
Additionally, the central bank also issued its most stern warnings yet about the short and long-term damage of a ‘Brexit’ on the economy.
While not hugely positive for Sterling, it didn’t surprise investors either and the EUR/GBP pair levelled at around 0.7962.
EUR/GBP Higher after Eurozone Inflation Increase
After the Eurozone’s final inflation figures for March were positively revised from previous estimates, the Euro to Pound Sterling (EUR/GBP) exchange rate edged slightly higher.
However, gains were limited as investors speculated on the likely outcome of the Bank of England’s (BoE) upcoming policy meeting.
While any alterations to fiscal policy are unlikely, the central bank could adopt a less dovish tone in light of the UK’s latest inflation data.
The Euro to Pound Sterling exchange rate is currently trending in the region of 0.7966.
- EUR/GBP Drops Again – Poor Eurozone industrial production knocks pair lower
- ‘Brexit’ Fears Up – Polls and warnings from Tuesday weigh on both currencies
- Forecast – March’s Eurozone CPI Score Expected to Improve
- Forecast – Will the Bank of England adopt a dovish tone?
The Euro to Pound Sterling (EUR/GBP) exchange rate declined for a third day as Wednesday’s only datasets proved to be negative for the Eurozone.
The UK’s recently released inflation data also continued lending the Pound support amid hopes the increase in consumer price pressures might encourage the Bank of England (BoE) to be more upbeat when it gathers this week.
Euro (EUR) Down on Bearish Eurozone Industrial Production Data
With forex markets still struggling to come to terms with the European Central Bank’s (ECB) latest minutes release, Wednesday’s sole ecostats did little to reassure investors who were still frustrated with the ECB’s extensive easing measures.
Eurozone industrial production reports scored worse-than-expected in both monthly and yearly prints. The key year-on-year figure came out at a disappointing 0.8%, despite the previous score being a healthy 2.9% and analysts predicting a more reasonable 1.3%.
The ECB had previously discussed a wide variety of easing measures that could be put into practise if current means fail to stimulate the Eurozone’s economy in the near future.
Anxiety has risen in investors as the extreme easing has caused criticism and doubt to be cast on the central bank from some German officials – however weak Eurozone data reflects the need for easing, as argued by French Finance Minister Michel Sapin on Wednesday afternoon.
‘Brexit’ Rows Take Centre-Stage Again as Anxiety Grips Europe
The International Monetary Fund (IMF) argued on Tuesday that a ‘Brexit’ would not merely be a huge risk to the UK’s domestic economy, but cause significant challenges for the entirety of Europe going forward.
This hit headlines on Tuesday evening alongside the latest EU referendum poll by ICM, whose results indicated that the ‘Leave’ campaign was edging higher in numbers with a 45% backing vs. the ‘Remain’ camp’s 43%.
As Pound (GBP) investors are likely very used to by now, investor-concerns of a post-‘Brexit’ Britain once again weakened Sterling, but this time speculation also appears to have weakened the Euro amid increasing amounts of analysts warning that the event would also harm the Eurozone.
Regardless, the Pound gained on the Euro this week thanks to positive UK CPI released on Tuesday, progress in the nation’s Tata Steel plant sales and falling EUR demand.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Eurozone CPI and BoE Decisions Today
After a relatively quiet Wednesday session, the EUR/GBP pair is likely to move on economic data again today as investors anticipate the day’s key releases.
First up later this morning is the final March Eurozone Consumer Price Index (CPI) report. While preliminary figures were slightly up from February’s, investors are likely to pay close attention to any changes.
The year-on-year score is currently forecast to come in at -0.1%, which would be a small improvement from February’s -0.2%.
The early afternoon will see the Bank of England (BoE) announcing its key interest rate and asset purchasing target decisions.
Analysts expect interest rates to remain at their record low of 0.50%, but some bears have suggested further rate cuts could be hinted at as a damage control measure for a potential ‘Brexit’ in June.
As for EUR/GBP movement, poor Eurozone CPI has a strong chance of helping Sterling gain as it would follow on from a string of disappointing Eurozone reports and put pressure on the ECB to stimulate an economy that continues to struggle.