Euro to Pound Sterling (EUR/GBP) Exchange Rate Higher, Eurozone Current Account Surplus Increases
Prior to the publication of the European Central Bank’s (ECB) meeting minutes and the Eurozone’s Consumer Confidence data, the Euro to Pound Sterling (EUR/GBP) exchange rate was trading in a stronger position.
The Eurozone’s Current Account report showed that, on a non seasonally adjusted basis, the surplus swelled from 24.6 billion Euros to 29.2 billion Euros in December.
On a seasonally adjusted basis, the surplus narrowed from 18.1 billion Euros to 17.7 billion.
If today’s Eurozone Consumer Confidence Index shows the improvement expected, the Euro could move further away from yesterday’s 7-year low against the Pound.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading in the region of 0.7402 – up 0.2% on the day’s opening levels.
EUR/GBP Exchange Rate Down 0.6%
The Euro shed all of its recent gains against the Pound on Wednesday as the UK published better-than-expected employment figures and the Eurozone’s Construction Output data fell flat.
The UK’s unemployment rate unexpectedly dipped from 5.8% to 5.7% in the three months through December thanks for a stronger-than-anticipated increase in jobs.
Data from the Eurozone was far less impressive, with the level of construction output in the currency bloc falling by -0.8% on the month in December following November’s -0.5% dip.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading in the region of 0.7383
EUR/GBP Exchange Rate Rallies
Bets that Greece will reach an agreement with its creditors before the end of the month saw the Euro rally against the Pound on Tuesday.
As stated by analyst Christian Lenk; ‘Investors and analysts seem to be quite complacent and are still expecting a positive outcome. The market seems to be confident in terms of the two parties finding a solution in upcoming days. What’s interesting is the quite relaxed attitude investors have to the periphery. The domino effect everybody had been fearing is much weaker now.’
Meanwhile, demand for the Pound was limited as the UK’s inflation data pushed back Bank of England interest rate hike expectations.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading in the region of 0.7426
EUR/GBP Exchange Rate Fluctuates as the UK’s Core Inflation Increased
The Euro to Pound Sterling (EUR/GBP) exchange rate experienced movement following the release of the UK’s inflation data for January.
Core inflation, which strips out energy costs, was shown to have risen from 1.3% to 1.4% on a year-on-year basis, rather than falling to 1.25% as forecast.
However, non-core inflation eased from 0.5% to 0.3% in January as the weaker price of crude oil led to a -0.9% month-on-month slide.
Immediately following the publication of the data, the Pound continued trading 0.3% lower against the Euro but advanced by 0.1% against the US Dollar.
The Euro derived additional support as the ZEW Economic Sentiment and Current Situation surveys showed improvement, with German Economic Sentiment rising to 53.0 from 48.4 and the Current Situation measure increasing from 22.4 to 45.5.
A gauge of economic sentiment for the Eurozone as a whole surged from 45.2 to 52.7.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading in the region of 0.7404
The Euro to Pound Sterling (EUR/GBP) exchange rate could recover its recent losses in the hours ahead if UK CPI prints beyond a 25-year year low.
EUR/GBP Exchange Rate Below 74 Pence after Failed Eurogroup Meeting
The slim hopes that yesterday’s Eurogroup gathering would see Greece reach an accord with its creditors were swiftly dashed as the meeting concluded in record time with no progress being made.
European officials quickly realised that Greece is unwilling to concede any ground on its proposed debt renegotiation, and as they are also not prepared to compromise, the gathering concluded with an impasse.
The Euro to Pound Sterling (EUR/GBP) exchange rate hit a low of 0.7373
With Greece due to run out of money before the end of the month, every failed discussion brings the nation a step closer to exiting the ‘Eurozone’.
When speaking after the highly unsuccessful meeting, Eurogroup chief Jeroen Dijsselbloem noted that there isn’t enough time left to renegotiate the programme to everyone’s satisfaction and that Greece must first agree to extend its current bailout to give the discussions more time – a proposal Greece has rejected.
According to Bloomberg; ‘There may be a temptation in Greece to wait out the Eurogroup, but this would be a risky strategy. The longer Greece waits, the worse things will get in the domestic economy. The already stressed banking sector already is reliant on Emergency Liquidity Assistance (ELA) approved by the European Central Bank, which that bank has already had to increase by 5.4 billion Euros (6.13 billion Dollars) since it was introduced.’
Immediately after the discussions broke down, the Euro declined against the majority of its currency counterparts.
The single currency has since recovered some ground however as EU 25 New Car Registrations came in at 6.7% in January, up from 4.7% in December.
If today’s ZEW Economic Sentiment and Current Situation surveys also show the improvement expected, the Euro could rally in the hours ahead.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Gain if UK CPI Falls
The EUR/GBP pairing could also head higher in response to the UK’s Consumer Price Index.
Economists have forecast that the pace of non-core inflation slowed from 0.5% to 0.4% in January.
The Euro to Pound Sterling (EUR/GBP) exchange rate hit a high of 0.7396
However, some industry experts expect the figure to print beyond a 25-year low.
Although the prospect of UK inflation falling to or beyond 0.0% has been highlighted by the Bank of England, and priced into the market to a certain extent, a much lower-than-expected figure would be Pound-negative.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3517
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1352
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8806
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7396