The Euro Pound exchange rate steadily fell last week, but this week’s Eurozone inflation data could trigger a major rebound.
- EUR GBP rate fell from 0.85 to 0.84 last week – GBP EUR rose from 1.16 to 1.18
- Major Eurozone confidence scores due Monday – Inflation and jobs stats also out
- UK PMIs out this week – More negatives ahead for UK confidence score?
- Greek debt deal remains in focus – House of Lords could amend Article 50 bill
The biggest piece of Eurozone news last week focused on Greece, where the Greek debt crisis came to a head on Monday.
Seemingly against the odds, Greek officials and international creditors reached an agreement over funding, with more reforms being adopted in exchange for the next tranche of bailout money.
This had a mixed reception, with Government officials expressing optimism, but the opposition New Democracy group stated;
‘The government is celebrating the return of the institutions to Greece while the economy is sinking’.
The UK also had political developments in the background, with peers in the House of Lords debating the Article 50 bill. This brought with it hopes of amendments, given that the Lords exercises greater independence than the Commons.
The Euro’s chances to bounce against the Pound this week will start on Monday, when Eurozone confidence scores for February are due. Recent limited forecasts have been pessimistic, estimating a drop from -4.7 to -6.2 for consumer confidence.
Unemployment and inflation figures are the other main announcements this week, with German figures out on Wednesday and Eurozone versions due Thursday. Eurozone and German inflation rose the previous month, so further increases could trigger a Euro rally on the hopes of European Central Bank (ECB) policy tightening.
Additionally, if it looks like the Greek populace is dissatisfied with the recent bailout arrangements, the Euro could tumble on fears of another cycle of instability.
On the UK side, if Sterling is to rise against the Euro then positive movement in Tuesday’s GfK consumer confidence score is required; previously a -5 point printing was seen.
The other big UK news will be the week’s PMIs. Forecasts have been varied, with a rise in construction expected alongside drops in the manufacturing and services fields.
If the Lords settle decisively on any amendments to the Article 50 bill, this could provide a background boost to Pound demand.
Current EUR GBP Interbank Exchange Rates
At the time of writing, the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.84 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.18.