The Euro firmed against the Pound on Wednesday as economists expect that today’s weaker-than- forecast Eurozone inflation data increased just enough to prevent the European Central Bank from introducing monetary easing measures such as negative rates and quantitative easing at next week’s policy meeting.
Earlier in the session the single currency had been under pressure as investors grew nervous. According to the European statistics agency, annual inflation growth in the Eurozone increased by 0.7% in April an improvement on March’s figure of 0.5%. Economists had been forecasting for a rise to 0.8%. Despite the slight rise the inflation rate remains well below the ECB’s target of just below 2%.
“Eurozone April inflation of 0.7% might bring a conventional response from the ECB, but very unlikely to bring an unconventional one. So QE is unlikely,” said an economist from LNGCapital.
Other data released in the Eurozone proved to be mixed with German retail sales and French PPI data coming in below forecasts. Spain offered the currency support however as data out of the Mediterranean nation showed that GDP and inflation came in positively.
Sterling remains supported by expectations that the UK economy will continue to strengthen. A report released last night showed that consumer confidence in the UK improved in April to reach its highest level since the start of the financial crisis in 2007.
The GfK’s headline consumer confidence index rose to -3 from the -5 seen last month. The figure was better than expectations for -4.
“The seemingly inexorable rise of the index continues alongside a number of other economic indicators that continue to provide good news for the government,” said Nick Moon, managing director of social research at GfK.
Sterling could recover ground and push higher against the Euro on Thursday if tomorrow’s UK mortgage approval data comes in as forecast.
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,1.3823 ,
Euro,,British Pound,0.8222 ,
Euro,,Canadian Dollar,1.5146 ,