The Euro to Pound Sterling (EUR/GBP) exchange rate began the week little-changed having fluctuated on Friday in response to disappointing Business Optimism figures for Germany, the Eurozone’s largest economy. With European news lacking today, any additional fluctuations in the EUR/GBP pairing may be limited.
The Common Currency dropped to an eight-month low against the US Dollar after the figures were published but managed to escape relatively unscathed against the Pound as the British asset came under pressure of its own.
Sterling slipped against peers like the Euro and US Dollar last week after Bank of England minutes showed a unanimous interest rate decision and UK retail sales figures failed to perform as well as hoped.
With the prospect of a BoE rate hike taking place in November now looking shaky, the Pound to Euro exchange rate continues to trend below 1.27.
On Monday the Euro to Pound exchange rate experienced minimal movement following the publication of mildly disappointing Italian reports.
Although investors had been expecting Italy’s gauge of business confidence to rise from a revised 99.9 in June to 110.2 in July the measure actually fell to 99.7 as assessments on new orders slid.
However, a separate measure of economic sentiment climbed from 88.2 to 90.0 and production expectations rallied.
Other figures showed a -1.7% month-on-month decline in Italian retail sales in June following a revised gain of 0.4% in May. On the year sales were up 4.8%, down from an annual increase of 5.5% the previous month.
While movement in the Euro to Pound (EUR/GBP) exchange rate was restrained due to a lack of economic news from the UK, fluctuations in the pairing are likely to occur over the next few days as influential Eurozone data sets (including the nation’s Consumer Price Index) are published.
It is expected that the Eurozone’s consumer price inflation rate held at 0.5% in July, and the threat of persistently low inflation is something which may only be tackled if the European Central Bank introduces additional stimulus measures.
As strategist Benjamin Schroeder was quoted as saying; ‘Speculation about an asset-purchase programme from the ECB is likely to gain further traction’.
In other currency news, the Euro continued to trade in a softer position against the US Dollar as investors bet that today’s US Markit Services PMI report would show another month of strong expansion in the sector.
Tomorrow sees the release of UK Mortgage Approvals figures for June.
We forecast that a surprising result could cause some Euro to Pound Sterling (EUR/GBP) exchange rate movement.
UPDATED: 10:35 GMT 29 July, 2014
EUR/GBP Unmoved by UK Mortgage Approval Data
Although the Euro to Pound Sterling exchange rate briefly spiked in response to a report showing an unexpectedly strong increase in UK Mortgage Approvals, a downward correction left the EUR/GBP pairing little-changed as the European session continued.
With no additional European reports scheduled for release in the hours ahead, the EUR/GBP exchange rate is likely to continue trending in a narrow range.
Some market movement could be occasioned by the US Consumer Confidence index.
UPDATED 10:30 GMT 30 July, 2014
Mixed Eurozone Reports Cause EUR/GBP Fluctuations
The Euro to Pound exchange rate experienced modest movement ahead of the release of Germany’s inflation data as several other influential reports were published in the currency bloc.
While the Eurozone’s Economic and Industrial Confidence measures showed unexpected improvement in July, the region’s Business Climate Indicator and Services Confidence gauges came in below forecast levels. The Eurozone’s Consumer Confidence measure was unchanged at -8.4.
The EUR/GBP pairing moved between a low of 0.7907 and a high of 0.7920.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7912. If today’s German CPI prints in line with or below estimated levels the Euro could soften against its British counterpart before the close of the local session.
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,1.3434,
Euro,,British Pound,0.7912,
Euro,,Australian Dollar,1.4300,
Euro,,New Zealand Dollar,1.5732,
Euro,,Canadian Dollar,1.4517,
[/table]
