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GBP/EUR, GBP/USD Exchange Rates Extend Slump after Disappointing Inflation Report

Weaker German Confidence Fails to Boost Pound Sterling to Euro (GBP/EUR) Exchange Rate Today

Ahead of this morning’s UK Retail Sales data Pound Sterling (GBP) remains in a slump against rivals. Although German Consumer Confidence was found to have weakened in March from 9.5 to 9.4 this has failed to particularly bolster the Pound Sterling to Euro (GBP/EUR) exchange rate, which is trending in the region of 1.2613.


There remains little reason to buy into the Pound (GBP) on Wednesday, with markets still discouraged by yesterday’s weaker-than-expected UK inflation data.

‘Brexit’ Worries and Weak Inflation Drag Pound Sterling (GBP) Lower

Pound Sterling (GBP) has continued to extend its recent losses today, with concerns over a possible ‘Brexit’ and the increasingly uncertain state of the latest UK budget weighing heavily on market sentiment. Investors were further discouraged by February’s Consumer Price Index report, which showed that baseline inflation had failed to rise to 0.4% as forecast to instead remain stagnant at 0.3%. With weaker inflationary pressure limiting the impetus for the Bank of England (BoE) to consider raising interest rates in the near future, this disappointing result saw Sterling sharply fall against rivals.

Ahead of the Easter break the Pound could rally if the latest Retail Sales data betters expectations. However, as traders are anticipating a moderate slump in retail spending during February it seems that Sterling could remain generally out of favour for some days to come.

German Manufacturing Falls Short of Forecast to Dent Euro (EUR) Exchange Rate

Although the German IFO Business Sentiment Survey showed a stronger uptick in business confidence than markets had expected this failed to particularly strengthen the Euro on Tuesday. Germany’s March Manufacturing PMI showed an unexpected slowing in sector growth, the latest sign that the Eurozone’s powerhouse economy is not in such a robust state as it once was. With doubts remaining over the European Central Bank’s (ECB) ability to spur domestic inflation the single currency struggled against many of the majors yesterday.

This afternoon’s Eurozone Consumer Confidence report may offer some support to the Euro, with sentiment expected to have recovered somewhat in March. However, traders have continued to largely favour safe-haven rivals such as the US Dollar (USD) and Japanese Yen (JPY) in the wake of Tuesday’s terror attack in Brussels.

US Dollar (USD) Exchange Rate Soars on Further Hawkish FOMC Comments

Demand for the US Dollar has continued to surge, meanwhile, as members of the Federal Open Market Committee (FOMC) further undermine the more dovish message that initially emerged from last week’s policy meeting. Following on the heels of two other non-voting members of the FOMC, Philadelphia Fed President Patrick Harker expressed the opinion that the central bank should consider raising interest rates again in April. While at this moment contained to non-voters, the increasing hawkish dissent amongst policymakers has helped to shore up the appeal of the ‘Greenback’.

As a result markets have been inclined to ignore the somewhat disappointing nature of yesterday’s Manufacturing PMI, which failed to rise as far as forecast, and could potentially dismiss a bearish result from tomorrow’s Durable Goods Orders if the current mood prevails.

Current GBP, EUR, USD Exchange Rates

At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower at 1.2661, while the Pound Sterling to US Dollar (GBP/USD) pairing was slumped in the region of 1.4168. Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate was losing ground around 1.1190.