Euro to Pound Sterling (EUR/GBP) Exchange Rate Climbs 0.4% before the UK’s Construction Report
The Euro acted against expectations on Friday by rising against the Pound and US Dollar in spite of disappointing data for the Eurozone.
Germany’s Wholesale Price Index fell by -0.7% on the month in November, steeper than the decline of -0.6% recorded in October.
The wholesale price index was down -1.1% on the year.
Given the speculation surrounding the prospect of additional stimulus from the European Central Bank (ECB), less than impressive domestic ecostats and the current political concerns in Greece, the Euro’s resilience is somewhat surprising.
However, the common currency could soften later today if the Eurozone’s Industrial production report disappoints.
Earlier…
The Euro to Pound Sterling (EUR/GBP) exchange rate pared gains as the European session progressed and the odds of further stimulus from the European Central Bank (ECB) increased.
EUR/GBP Exchange Rate Steadies, EUR/USD Declines after Retail Sales
The Euro to Pound Sterling (EUR/GBP) exchange rate pared its initial advance to trade in the region of 0.7923 in response to increased expectations that the ECB will roll out full scale quantitative easing early next year.
The take up from the ECB’s Long Term Refinancing Operations (LTRO) has been poor, adding to the argument in favour of the central bank taking additional action and causing some Euro softness. As stated by researcher Nick Kounis; ‘It now looks close to impossible for the ECB to achieve anywhere near a trillion Euro balance-sheet expansion with its existing measures. It will need to broaden asset purchases, and sovereign bonds will need to be part of the mix. The bottom line is that the disappointing TLTRO outcome has brought sovereign QE another step closer.’
Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate dropped by 0.4% during the North American session as US retail sales figures printed above expected levels.
Sales were up 0.7% on the month, bettering expectations for a 0.4% increase. October’s retail sales gain was positively revised to 0.5%.
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.2% on Thursday as final German inflation figures were unchanged from initial estimates.
EUR/GBP Exchange Rate Climbs Despite German Inflation at 4 ½ Year Low
Both the Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates advanced as Germany’s Consumer Price Index held at the initially estimated annual figure of 0.6% after stagnating on the month in November.
Germany’s EU harmonised consumer price index came in at 0.5% on the year and also stagnated on the month.
The figures confirmed the estimates released on November 27 and put consumer price growth at a four-and-a-half year low. When the initial figures were published ING analyst Carsten Brzeski asserted; ‘Looking ahead, the recent drop in energy prices – if sustained and if not offset by strong currency weakening – could push German headline inflation further down. For next week’s ECB meeting, today’s German inflation data could be the prelude of another downward revision of the ECB’s inflation forecasts.’
While the data was hardly encouraging, the fact that the figures were unaltered during Thursday’s European session gave the Euro a modest boost and the common currency strengthened against several of its main peers.
Pound Sterling (GBP) Exchange Rate Demand Undermined by UK House Price Data
The gains in the Euro to Pound Sterling (EUR/GBP) exchange rate were also enabled by disappointing UK house price data.
Figures compiled by the Royal Institute of Chartered Surveyors (RICS) showed that UK house price growth slowed to an 18-month low in November.
The house price index dropped from 20 to 13 on the month.
RICS said of the data; ‘It’s no surprise that surveyors are expecting an uplift in the market in response to the overdue reforms to the stamp duty tax system which the Chancellor himself called ‘the most damaging tax of all’. Removing the ‘dead zones’ will reduce the distortion in the market and ensure that those at the top end of the market will now contribute fairly, while those at the bottom will be given a fairer chance to get on the ladder.’
Today’s Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast
The Euro to Pound (EUR/GBP) exchange rate could experience additional movement in the hours ahead following the publication of the European Central Bank’s (ECB) monthly report.
Investors will also be looking ahead to tomorrow and the release of Germany’s wholesale price index, Eurozone industrial production stats and the UK’s construction output report.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7937,
Euro,,US Dollar,1.2430,
Euro,,Canadian Dollar,1.4273,
Euro,,Australian Dollar,1.5005,
Euro,,New Zealand Dollar,1.5941,
US Dollar,,Euro ,0.8042,
Pound Sterling,,Euro,1.2596,
Canadian Dollar,,Euro,0.7005,
Australian Dollar,,Euro,0.6663,
New Zealand Dollar,,Euro,0.6274,
[/table]
