The Euro to GBP exchange rate softened on Monday after data showed that inflation in the Eurozone slowed in March to its lowest-level in more than four-years, raising speculation that the European Central Bank will introduce stimulus measures in order to aid the region’s flagging economic recovery.
According to the Luxembourg based European Union statistics office, consumer prices grew by 0.5% on the year, down from the previous month’s figure of 0.7%. The figure was also below the 0.6% being forecast by economists. Concerns over deflation are sure to return as today’s report signals that inflation has been under 1% for the past six months, well below the ECB’s target of just under 2%.
Today’s inflation data are estimates. The statistics office will release final figures for March on April 16th.
All eyes will now turn to Thursday when the ECB holds its latest policy meeting. Expectations will be high that it could alter interest rates.
The Euro did find some support earlier in the session after a report showed the German retail sales unexpectedly jumped in February, rising optimism that the region’s biggest economy will see a strong start to the year. Positive GDP data out of France also limited the single currency’s losses.
Earlier in the session the Pound initially softened against several major peers in a session jam packed with data releases after domestic data showed that the number of mortgages being approved in February fell more-than-expected and that there was another fall in business lending.
According to the Bank of England there were 70,309 mortgage approvals in February, the lowest figure seen since October 2013. The report was a sharp drop from January’s figure of 76,753 which was the highest figure seen in six years. The drop was more than the figure of 75,250 economists had been expecting.
The decline was being blamed on the month’s extreme weather which saw large swathes of the south of England flooded and heavy rains impact upon business.
Also putting pressure upon the Pound was a separate report which showed that business lending fell again in February. The BoE said that lending was down by £750 million compared to the previous month but said it was a slower rate of decline than that seen at the start of the year.
Important data releases for the Euro
Tuesday 1st April – Manufacturing PMI, Unemployment rate
Wednesday 2nd April – GDP growth rate, PPI data
Thursday 3rd April – Markit services PMI, Retail sales, ECB interest rate decision
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3764 ,
Euro,, Pound Sterling,0.8275 ,
Euro,,Australian Dollar,1.4910 ,
Euro,,Canadian Dollar,1.5221 ,
[/table]
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