The Euro (EUR) to Pound Sterling (GBP) exchange rate surrendered last Friday’s gains as concerns over the economic impacts of Russian banning European foodstuffs and as increasing expectations that the European Central Bank will introduce monetary easing measures weighed.
Last week the Euro advanced against the US Dollar and other major peers as investors covered overextended positions. The gains were short-lived however, as concerns over Ukraine and the Middle East knocked sentiment towards the single currency and increased demand for safer assets.
With Russia, being Germany’s biggest trading partner outside of the European Union the region’s largest economy was knocked by tit-for-tat sanctions imposed by both the EU and Russia.
EU sanctions announced last month restrict the export to Russia of equipment to modernize the oil industry and prohibit the sale of machinery, electronics, and other civilian products that can be used for military or defence purposes. As
Germany is a major provider of such goods it has already begun to feel the negative effects.
Also weighing upon the single currency was a report released by the Organisation for Economic Cooperation and Development (OECD). According to them economic growth in Germany, the Eurozone’s largest economy will see weak growth rates over the coming months.
Euro to Pound Sterling Exchange Rate Forecast (EUR/GBP)
The Euro is likely to lose more ground against its major peers as NATO said on Monday that there is a high chance that Russia will launch an invasion of Ukraine in the coming days as the Ukrainian government continues to advance upon the Pro-Russian stronghold of Donetsk.
‘We see the Russians developing the narrative and the pretext for such an operation under the guise of a humanitarian operation and we see a military build-up that could be used to conduct such illegal military operations in Ukraine,’ said NATO Secretary-General Anders Fogh Rasmussen in an interview with Reuters.
Concerns over the situation in Iraq also weighed after embattle Prime Minister Nouri al-Maliki seems to have lost his job after a rival Shia candidate was appointed by the nations President to form a new government.
Tuesday’s ZEW sentiment data for the Eurozone and Germany is also likely to put pressure upon the currency as economists forecast that the reports will be weaker than the ones seen in July.
EUR to USD Exchange Rate Softens after Lower-than-Forecast Economic Sentiment Reports
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.3357.
Today’s ZEW economic sentiment reports have had a marked influence on the softening of the Euro.
The ZEW Survey for Eurozone Economic Sentiment dropped dramatically from the previous figure posted at 48.1 to 23.7. Also the indicator for the current economic situation in the euro area decreased in August by 2.3 points to a value of minus 33.8 points.
Further softening can be attributed to the ZEW German Survey for Economic Sentiment. The forecast figure of 17.0 was already a dramatic decline from the previous figure 27.1, but the actual data was shocking in comparison having posted a figure of only 8.6.
ZEW has related this poorer-than-forecast data to escalating geopolitical issues.
The Euro to US Dollar (EUR/USD) exchange rate has experienced a low of 1.3334 and a high of 1.3383.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3385 ,
Euro,, Pound Sterling,0.7970,
Euro,,Australian Dollar,1.4438 ,
Euro,,Canadian Dollar,1.4647 ,
Pound Sterling,,Euro,1.2539 ,
US Dollar,,Euro,0.7473 ,
[/table]
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