Newsflash: Pound Sterling to Euro (GBP/EUR) Breaches 1.39 after UK Inflation News
As the European session progressed the Pound Sterling to Euro (GBP/EUR) exchange rate advanced beyond the 1.39 level as investors digested the UK’s inflation report.
If tomorrow’s UK employment data shows an uptick in average earnings and a multi-year low unemployment rate, Sterling could extend gains as the week progresses.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3920
The Pound Sterling to Euro (GBP/EUR) exchange rate could approach the 1.39 level in the hours ahead as rising UK inflation and poor Eurozone data impacts sentiment.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Sterling Fluctuates as UK Inflation Data Meets Forecasts, BoE Expected to Hold Rates for Longer
Prior to the publication of the UK’s inflation data, the Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.3789.
However, while the Pound initially fluctuated after the British Consumer Price Index (CPI) was released, the currency later stabilised back above the 1.38 level.
The inflation data showed an increase from -0.1% to 0.1% year-on-year, as expected by economists.
The Bank of England (BoE) had promised that the UK’s dip into deflation territory would prove short lived and it appears they were right. But with inflation still so far below the BoE’s 2% target, the central bank is unlikely to start adjusting interest rates any time soon.
Core inflation also failed to rise by as much as anticipated, advancing from 0.8% to 0.9% instead of achieving the 1.0% predicted.
The data prompted this response from one ONS statistician; ‘Last month CPI turned negative, mainly because of falling transport fares due to the timing of Easter. This month, that fall has been reversed.’
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.3849 today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate News: ZEW Confidence Data for Germany and the Eurozone Plummets, German Inflation Meets Forecasts
Meanwhile the Euro to Pound Sterling (EUR/GBP) exchange rate was able to gain on Tuesday in spite of the ongoing deterioration of the negotiations between Greece and its creditors.
With no developments in the situation expected before the next round of talks on Thursday, the Euro was fluctuating in response to domestic developments.
Early in the European session Germany’s Consumer Price Index confirmed monthly consumer price gains of 0.1% and an annual inflation figure of 0.7% in May – in line with initial estimates.
The Euro even managed to avoid posting a notable decline against peers like the Pound and US Dollar after the ZEW Economic Sentiment indexes for Germany and the Eurozone were published.
The measure for the Eurozone slumped to 53.7 from 61.2 while the German gauge fell from 41.9 to 31.5 – a much lower level than anticipated.
The German Current Situation figure was also a disappointment, printing at 62.9 in June rather than hitting 63 as projected.
ZEW President Professor Clemens Fuest noted; ‘External factors are reducing the scope for further improvement of Germany’s good economic situation. These include, in particular, the ongoing uncertainty over Greece’s future and the restrained dynamic of the global economy.’
The Euro was able to derive some support from the news that the EU Court of Justice backed the European Central Bank’s Outright Monetary Transactions (OMT) programme – giving the ECB more policy tools in its arsenal.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7226 today.
BoE Meeting Minutes, UK Employment & Retail Sales Data Forecast to Push Pound Sterling to Euro (GBP/EUR) Exchange Rate to 1.39 before Greek Talks Resume this Week
Although the UK’s inflation data failed to trigger the Pound Sterling to Euro (GBP/EUR) exchange rate rally some had envisaged, the Pound could still hit 1.39 against its European peer as the week progresses.
If the minutes from the Bank of England’s (BoE) latest policy meeting show that one or more members of the Monetary Policy Committee (MPC) voted in favour of higher borrowing costs at the last gathering, Sterling could surge.
Whilst it is more likely that all nine members of the MPC voted to leave borrowing costs on hold, the Pound may climb tomorrow if the UK’s employment report reveals that the unemployment rate held at a multi-year low while average earnings increased.
The week’s UK retail sales report is also likely to influence GBP/EUR trading, although economists will also be looking to the resumption of Greek bailout talks on Thursday for guidance.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3818 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7236