The Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates firmed on Wednesday but those gains are forecast to be short-lived as concerns over Greece continue to build and economic data out of France continues to weigh.
Comments made by European Central Bank Executive Benoit Coeure firmed the single currency as he said that the ECB’s fiscal stance is appropriate but that national governments need to do more to ensure that the Eurozone economy does not remain stuck with low growth and low inflation.
‘I see the risk that the Eurozone economy would stabilise on a path with low growth and low inflation. My belief is that it is not sustainable,’ said Coeure. The comments increased expectations that the ECB is edging closer to introducing more stimulus measures in order to tackle low inflation and stagnating growth.
Earlier in the session, the Euro was under pressure from data out of France, which showed that the industrial and manufacturing production in the Eurozone’s second largest economy declined sharply in October.
Despite that weak data, the Euro firmed against the Pound as UK balance of trade data came in below economist forecasts. The UK’s trade deficit narrowed to its lowest level in seven months in October to £10.506 billion. Despite the drop, the figure disappointed as a figure of £9.53 billion was expected.
The single currency also advanced against the US Dollar as oil prices continued to fall and investors embarked on a round of profit taking. Oil prices continued to decline as OPEC said that demand for the commodity would be lower next year due to a current oversupply.
Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) Exchange Rate Forecast
The Euro is forecast to give up gains as concerns mount over the political situation in Greece. Uncertainty increased after the Greek government announced that the vote for a new president had been move forward to next week.
‘Prime Minister Antonis Samaras’s gambit on calling a vote on the vexed issue of the presidency appears to have backfired. With all five opposition parties rejecting Mr Dimas as a candidate, which could of course in theory be resolved with an alternative candidate, but it would appear that the opposition are determined to force a general election. With the hard-left Syriza leading the polls, default and Grexit risks are again looming in the headlights (for reference Syriza is expected to demand a 50% “write-off” of its outstanding debt, and that the ECB buys all Greek debt for many decades to come on a zero rate basis),’ said Marc Ostwald from ADM Investor Services.
The Euro is also likely to come under pressure on Thursday if the latest inflation data out of Germany and France disappoints.
Euro Exchange Rates:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.2424 ,
Euro,,British Pound,0.7911 ,
Euro,,Australian Dollar,1.4945 ,
Euro,,Canadian Dollar,1.4264 ,