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Euro to USD Exchange Rate Trims Minutes Gain, Euro to GBP Fluctuates

Euros

After an interesting week by way of data releases, the Euro to GBP is fluctuating as a result of developments in Portugal. The Euro to USD exchange rate has also shed 0.3%.

The Pound is currently trading lower against the US Dollar at 1.7115 while the Euro trades in the region of 1.3597 against the ‘Buck’.

The Pound weakened on Thursday after a string of negative data releases this week has made it less appealing to investors. Thursday’s latest poor data and decision from the Bank of England to keep interest rates at 0.5%, is causing a loss of appeal to investors hoping for the UK economy to prove strong enough to maintain an interest rate hike.

The Eurozone however is subject to more economists’ fears, after the most prominent Eurozone country, Germany, has the potential to falter. With recent German statistics failing to meet expectations of late, and further predictions that German economic growth could stumble, the exit from financial crisis looks less smooth.

An expert in the field, Guntram Wolff commented: ‘Germany should be the locomotive of Europe. But the feeling in Germany is that we want to rely on the strength of the last 10 years in manufacturing, and we don’t accept change in the economy. The services sector, for example, is still quite regulated.’

Moreover, France the next most prominent Eurozone contender seems unlikely to be able to spring back in a strong or confident manner.

Economist Carsten Brzeski stated: ‘The Eurozone is flat lining. I don’t see substantial growth for another year.’

Furthermore, economist Jonathon Loynes stated: ‘The numbers are bumpy. I think the economy is growing, but… not strongly enough to sustain a strong economic recovery across the Eurozone as a whole.’

The US Dollar has also slipped after the release of the Federal Reserve’s meeting minutes, which have also quelled any hopes of interest rate hike discussions. The interest rates in the US have become hot topic recently as the US presented positive employment statistics last week.
However with Yellen remaining steady in her stance toward interest rate hikes, the US Dollar has softened.

However, after a major Portuguese bank missed a debt repayment and triggered concerns regarding the stability of the nation’s banking system, the Euro posted widespread declines.

Friday will see Eurozone German Consumer Price Index data, which is currently forecast to remain the same; the UK Construction Output statistics which is expected to rise to 5.6% in May, from the former 4.6% in April; and the US Monthly Budget Statement which is predicted to sit at $79.0B.

Tomorrow could prove an interesting day for all three currencies, especially if the UK results don’t reach the heights predicted.