Euro (EUR) Exchange Rate Slumps as German GDP Fails to Impress
A somewhat mixed raft of German GDP data has prompted the Euro (EUR) to return to more dovish form on Friday morning, as growth within the Eurozone’s powerhouse economy appears to be faltering somewhat. Consequently the Euro to Pound Sterling (EUR/GBP) exchange rate has been trending lower at 0.7770, while the Euro to US Dollar (EUR/USD) pairing has slumped around 1.1271.
Stock market volatility and global uncertainty have helped the Euro (EUR) to trend higher against Pound Sterling (GBP) and the US Dollar (USD) this morning.
Riksbank Interest Rate Cut Shores up Demand for Euro (EUR) Today
Despite a lack of domestic economic data, the Euro (EUR) has been on strong form this morning, even though shares in the banking sector have largely resumed their downward trajectory. Persistent global slowdown concerns have continued to prompt traders to buy into the safe-haven Euro today, in spite of the relative strength of the US Dollar (USD) and Japanese Yen (JPY). Although investors were surprised by the Riksbank’s decision to cut interest rates even deeper into negative territory this has equally helped to shore up the single currency as its appeal increases. While this move seems to indicate a strong belief that the European Central Bank (ECB) will opt to implement further monetary loosening measures in March, the common currency has nevertheless been trending higher against rivals.
US Dollar to Euro (USD/EUR) Exchange Rate Slips after Fed Comments
The ‘Greenback’ has been somewhat volatile following comments from Fed Chair Janet Yellen, as the policymaker failed to rule out the possibility of an imminent interest rate hike. Yellen stressed the stronger underlying fundamentals of the US economy, while acknowledging the risks of negative global headwinds, and took a more balanced view with regards to the central bank’s policy outlook. Investors struggled to take a particularly strong direction from the statement, with the US Dollar initially rallying strongly before largely ceding its gains. In spite of continued market volatility, increasing demand for safe-haven assets this morning has meant that the ‘Greenback’ has remained in more mixed spirits, as pundits doubt the wisdom of the Fed’s current outlook.
As Yellen is due to speak further to Congress this afternoon, the US Dollar could see another surge in bullishness, providing the policymaker offers a greater measure of reassurance to investors.
Pound Sterling (GBP) Exchange Rate on Downtrend after Weak Industrial Production Data
Traders are continuing to move away from Pound Sterling (GBP) on Thursday, with little incentive to favour the asset over the other majors. Yesterday’s UK Industrial and Manufacturing Production figures proved decidedly disappointing, as output unexpectedly contracted on the month and the year. Of particular concern was the weaker performance of the overall industrial report, as investors had been anticipating that December would see a solid increase on the year. This suggested that the health of the UK economy was not as robust as hoped, a sentiment confirmed by the latest NIESR GDP estimate which dropped from 0.6% to 0.4%.
With ‘Brexit’ concerns mounting ahead of next week’s summit of European leaders, the Pound is expected to remain on a weaker trend, with the uncertainty of the UK’s future in the EU weighing heavily on the appeal of the currency. However, if Friday’s Construction Output figures prove more positive Sterling may regain some ground ahead of the weekend.
Current EUR, USD, GBP Exchange Rates
At the time of writing, the Euro to US Dollar (EUR/USD) exchange rate was making gains at 1.1338, while the Euro to Pound Sterling (EUR/GBP) pairing was on a bullish run around 0.7860. Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate was slumped in the region of 1.4428.