The Euro to Pound Sterling (EUR/GBP) exchange rate softened modestly during the European session as hopes that Scotland will vote to remain a part of the UK on Thursday boosted Sterling.
The EUR/GBP exchange rate was little-affected by the day’s only economic news from the Eurozone.
The currency bloc’s trade balance report showed that the surplus widened in July as export growth outstripped import growth.
On a non-seasonally adjusted basis, the Eurozone posted a trade surplus of 21.2 billion Euros in July.
This was quite an increase on the figure of 18.0 billion Euros recorded in the same period of the previous year and was the result of an annual exports climb of 3%. On a year-on-year basis imports rose by just 1%. China, the US and the UK were shown to be the Eurozone’s main export markets.
The monthly data was less impressive however, revealing a -0.2% dip in exports and a 0.9% rally in imports.
On a seasonally-adjusted basis, the trade surplus narrowed from 13.8 billion Euros in June to 12.2 billion Euros in July.
The Euro also came under pressure as an anti-Euro party stole the headlines in Germany, the Eurozone’s largest economy.
Alternative for Germany (AfD) believe the Eurozone should be dissolved and the party now occupies positions in two parliaments in eastern states – a fact which is bound to concern German Chancellor Angela Merkel.
The Chancellor has previously ruled out forming an alliance with AfD.
According to one Frankfurt-based economist; ‘It is still too early to consider the AfD a new political power in Germany’, but the fact that they are generating attention and support could undermine confidence in the Eurozone.
The Euro to Pound Sterling (EUR/GBP) exchange rate hit a high of 0.7984.
Additionally, European Central Bank President Mario Draghi has been warning the leaders of the 18 Eurozone nations that the stimulus measures outlined by the central bank at its last policy announcement will soon be coming into force.
As stated by Dutch Finance Minister Jeroen Dijsselbloem; ‘We need to accelerate the implementation of our ambitious structural reform agenda. We cannot solely rely on monetary policy, but need the appropriate policy mix.’
The Pound may cling to its modest gains against the Euro for the rest of the European session.
The Euro was also struggling against the US Dollar as the prospect of the Federal Reserve bringing forward its timeline for increasing interest rates lent the North American currency support.
Over the last few months the US has published a veritable flood of positive economic reports and the data could be enough to see the Federal Open Market Committee offer a definitive timeline for increasing borrowing costs when it gathers this week.
The EUR/USD pairing hit a low of 1.2913.
The Euro to US Dollar (EUR/USD) exchange rate may fluctuate later today when the US publishes industrial and manufacturing production figures.
It has been forecast that industrial production rose by 0.3% on the month and manufacturing production climbed by 0.2%. On target or above target data would be US Dollar supportive.
The EUR/USD exchange rate fluctuated before steadying to trade in the region of 1.2921.
EUR/GBP Exchange Rate Forecast
Tomorrow the Euro to Pound exchange rate is likely to experience extensive market movement as a result of the UK’s Consumer Price Index.
Slowing inflation would put back Bank of England rate hike expectations and could pressure the Pound while accelerating inflation might prompt the central bank to take action sooner than currently forecast.
The German and Eurozone ZEW economic sentiment surveys will also have an impact. Another month of declines would weigh on the common currency.
Meanwhile, the EUR/USD exchange rate will also be fluctuating ahead of the Federal Open Market Committee’s interest rate announcement on Wednesday.
Some investors believe that the FOMC will drop the term ‘considerable time’ from its interest rate rhetoric. If this proves to be the case it would show that the Fed intends to increase interest rates within six months and could trigger further ‘Greenback’ strength.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7954
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2568
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7954,
Euro,,US Dollar,1.2921,
Euro,,Canadian Dollar,1.4317,
Euro,,Australian Dollar,1.4361,
Euro,,New Zealand Dollar,1.5884,
US Dollar,,Euro ,0.7739,
Pound Sterling,,Euro,1.2570,
Canadian Dollar,,Euro,0.6982,
Australian Dollar,,Euro,0.6974,
New Zealand Dollar,,Euro,0.6287,
[/table]
