Euro to Pound Sterling (EUR/GBP) Exchange Rate Sheds over 0.2%
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7798 on Friday as Germany’s trade balance and industrial production reports fell flat while the UK’s trade balance and manufacturing production figures impressed.
The Euro is likely to continue trading in a weakened position ahead of the European Central Bank’s (ECB) interest rate announcement on the 22nd January.
The Euro to Pound Sterling (EUR/GBP) exchange rate continued to be under pressure on Thursday as economic data out of Germany and the wider Eurozone weighed upon sentiment towards the single currency.
Sentiment in the Eurozone showed little improvement and factory orders out of Germany fell sharply in December putting more pressure on the European Central Bank (ECB) to introduce more monetary easing measures at its upcoming policy meeting.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Slips, CPI Drops to -0.2%
The Euro to Pound Sterling (EUR/GBP) exchange rate registered a modest decline during the European session as the Eurozone’s Consumer Price Index came in at -0.2% – taking the currency bloc into deflation and falling below the forecast -0.1%.
As the measure of core inflation in the Eurozone climbed unexpectedly, EUR/GBP losses were limited.
Tomorrow’s flood of economic reports for the currency bloc, including the region’s retail sales figures, could cause further Euro to Pound Sterling (EUR/GBP) exchange rate volatility.
The pairing is currently trending in the region of 0.7836.
Ahead of the release of the Eurozone’s Consumer Price Index, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in a fairly narrow range.
EUR/GBP Exchange Rate Trades at 0.7839
The Euro to Pound (EUR/GBP) exchange rate is likely to experience volatility in the hours ahead, especially if the Eurozone’s CPI figure comes in below forecast levels.
Economists expect annual inflation to print at -0.1%, but as Germany’s inflation figures disappointed earlier in the week there’s a high probability that the figure for the currency bloc as a whole could fall short.
If that proves to be the case, you can expect the Euro to Pound Sterling (EUR/GBP) exchange rate to soften.
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by 0.2% on Tuesday as the UK’s negative services report caused widespread Sterling losses.
EUR/GBP Exchange Rate Gains even as Greek Concerns Grow
Although there were increased concerns surrounding the potential repercussions of the upcoming Greek election on Monday, the Euro to Pound Sterling (EUR/GBP) exchange rate held its own.
German Chancellor Angela Merkel has intimated that a victory for Syriza in Greece and the ‘Grexit’ this could occasion would be manageable. However, some analysts don’t agree and have asserted that a Greek exit from the Eurozone could have a serious impact on countries like Portugal and Italy.
These worries, in conjunction with European Central Bank (ECB) stimulus speculation, have left the Euro struggling against almost all of its most traded currency counterparts.
That being said, Friday’s less-than-impressive UK Manufacturing report and Monday’s below forecast Construction figure piled pressure on the Pound and helped the Euro to Pound Sterling (EUR/GBP) exchange rate recover from a recent seven-year low.
The Euro to Pound Sterling (EUR/GBP) exchange rate registered additional gains on Tuesday as the UK’s Services PMI showed a sharper-than-forecast declination in December.
When viewed together, the Manufacturing, Services and Construction reports indicate that the pace of UK growth slowed to 0.5% in the final quarter of the year. Growth this slow is unlikely to encourage the Bank of England (BoE) to increase interest rates before 2016.
The central bank will be making its next interest rate announcement on Thursday, but is unlikely to make any alterations to fiscal policy.
While the UK services report was hardly encouraging, David Noble of the Chartered Institute of Purchasing & Supply observed; ‘Though the index reports a slowdown this month, the recent wave of optimism has not abated amongst the panel’s respondents, half of whom believe 2015 will still be a good year.’
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7850
However, the EUR/GBP exchange rate’s advance was tempered as the Eurozone’s Composite PMI showed that the currency bloc recorded its slowest economic growth for more than a year in the final quarter of 2014.
The final composite measure was negatively revised from an initial flash estimate of 51.7 to 51.4 in December.
Markit economist Chris Williamson said of the result; ‘The Eurozone economy ended 2014 with its worst quarter for over a year. There’s some relief in that the rate of growth picked up slightly in December, rather than easing further, but the PMI reading was still the second-lowest seen for 17 months, highlighting another disappointing lacklustre performance. GDP looks set to rise by a mere 0.1% in the fourth quarter. The Eurozone will look upon 2014 as a year in which recession was avoided by the narrowest of margins, but the weakness of the survey data suggests there’s no guarantee that a renewed downturn will not be seen in 2015.’
The Euro to Pound Sterling (EUR/GBP) exchange rate brushed a low of 0.7819
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast
The Euro to Pound Sterling (EUR/GBP) exchange rate could experience volatility tomorrow as Germany publishes its Retail Sales Stats, Construction OPMI and employment figures.
The Eurozone’s Retail PMI will also be of interest.
However, movement in the EUR/GBP currency pair will most likely be occasioned by the Eurozone’s Consumer Price Index.
As Germany’s Consumer Price Index came in below forecast levels yesterday, investors are betting that the inflation figure for the Eurozone will also fall short. If that proves to be the case the Euro could fall across the board and the Euro to Pound (EUR/GBP) exchange rate could give up some of its recent gains.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7835
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2759
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8400
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1898