Euro Pound Sterling (EUR/GBP) Exchange Rate Slides on Slower Eurozone Inflation
The Euro Pound Sterling (EUR/GBP) exchange rate slumped, leaving the pairing trading at around £0.8686.
The single currency slipped against the Pound today after data showed consumer prices in the bloc grew at a slower pace last month.
Data from the European Union’s statistics office showed that the spread of Covid-19 depressed oil prices, leading to a -0.3% annual fall in energy prices.
While the bloc’s core inflation rate rose from January’s 1.1% to 1.2% in February, this did little to stop EUR/GBP from falling.
Sterling (GBP) Rises as Construction Output Jumps to 14-Month High
The Pound was able to make some gains against the Euro after UK construction data showed the sharpest rise in output since December 2018.
Added to this, new orders increased at the fastest pace since December 2015, while February’s staffing levels were nearing stabilization.
Construction jumped from January’s 48.4 to 52.6 in February, providing GBP with an upswing of support.
Commenting on this morning’s data, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said:
‘After a sustained period of contraction in construction last year, the resurgence in levels of new work at the fastest rate since December 2015 was a surprising but much-needed development for a sector that was on its knees. As the blocks of December’s election and Brexit uncertainty were largely removed, it was the residential sector that was the main winner with the fastest escalation in housebuilding since July 2018.
‘Should there be another sudden rise in purchasing activity in March, we are likely to see more challenges in supply chains, until suppliers have a chance to catch up. Given the slowdown in the global economy and potential coronavirus impacts, the sector could struggle to maintain February’s strong performance and may experience slower progress as we head into spring.’
Euro Pound Outlook: Service PMI Data in Focus
Looking ahead, the Euro (EUR) could slide against the Pound (GBP) following the release of Germany’s services PMI.
If data reveals the German service sector has expanded at a slower rate than expected, EUR will slump.
Meanwhile, better than expected UK services PMI data could provide Sterling with further support.
If the country’s largest sector expands at a faster rate than forecast, the Euro Pound (EUR/GBP) exchange rate will extend today’s losses.