The Pound (GBP) to Euro (EUR) exchange rate advanced back above the 1.28 level and was trading at a two-year high after the latest data out of Germany shows that consumer confidence in the Eurozone’s largest economy is expected to fall for a second consecutive month.
According to the monthly survey compiled by the GfK marker research group, consumer confidence in Germany is forecast to decline to 8.3 in October, a drop from September’s figure of 8.6. The drop was larger than expected with economists widely expecting a slight dip to 8.5.
‘It is above all the various international crises which are behind a slowdown in the consumer climate at present and the first signs of uncertainty are beginning to show among German consumers. If crises escalate further deterioration in general conditions in Germany which have so far held up, cannot be ruled out,’ said GfK.
The report added to concerns over the outlook for growth in the Eurozone’s biggest economy as data on Wednesday showed that Germany’s Ifo business confidence index deteriorated for the fifth successive month in September.
Data out of Italy also put pressure upon the Euro after the latest Business Confidence data came in below market expectations.
According to the Italian Statistics Office (ISTAT), Confidence among businesses in the Eurozone’s third largest economy dropped from August’s revised figure of 95.4 to 95.1. Economists had been expecting the figure to improve to 95.5.
Continuing to weigh on the Euro were comments made by European Central Bank President Mario Draghi.
On Thursday, Mr. Draghi reiterated that the ECB was committed to act in order to boost inflation across the 18-member currency bloc. The words increased speculation that the central bank will soon introduce a new quantitative easing programme.
“We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation,” Draghi said.
Euro to Pound (EUR/GBP) Exchange Rate Forecast
Further gains for the Pound could be restrained later in Friday’s session as the British parliament gathers to vote on whether to commit the nation to war.
The markets are widely expecting that MPs will vote in favour of the UK launching airstrikes against Islamic State militants in Iraq.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast
Against the US Dollar, the Euro is likely to make further losses as the markets await the release of US economic data that is expected to come in positively and increase expectations for an early US interest rate hike.
The possibility of earlier than expected interest rate hikes in the US was increased on Thursday after the Dallas Federal Reserve President said that the central bank could raise interest rates as soon as the spring of 2015.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2744 ,
Euro,, Pound Sterling,0.7810 ,
Euro,,Australian Dollar,1.4514 ,
Euro,,Canadian Dollar,1.4165 ,
Pound Sterling,,Euro,1.2800 ,
US Dollar,,Euro,0.7846 ,
[/table]
