The Euro to Pound exchange rate lost ground on Wednesday with the Euro weakened against the majority of its most traded peers following yesterday’s comments by ECB policy makers and as a report showed Italian retail sales fell more than forecast on a yearly basis.
The single currency tumbled sharply on Tuesday after Jens Weidmann, European Central Bank council member and head of the German Bundesbank said that negative rates could be introduced to be an appropriate response to the recent strong gains of the Euro. He also suggested that it was not out of the question for the Central Bank to buy loans or other assets from the regions banks in an attempt to tackle the threat from deflation.
Another European official piled on the pressure upon the Euro. According to Reuters Antonio Tajani said that the Euro was too strong.
The comments increased speculation that the ECB could introduce easing measures when it gathers for its monthly policy meeting next week.
Weaker than expected confidence data out of Germany and other Eurozone nations as a result of the standoff between the West and Russia also weighed upon the single currency.
“It seems to be building up a composite story of weaker trend in the business surveys for Germany in March, and that on its own was enough to send the Euro lower. The market got itself very short of Euro, and it didn’t quite see the dramatic talking down of the Euro by Mario Draghi as some might have thought would happen,” said the chief currency strategist at Westpac in an interview with Bloomberg.
Data released on Wednesday did little to improve Euro sentiment. Consumer confidence in Germany is forecast to stagnate next month according to the forward looking GfK consumer index. The report suggests that rising confidence is due to end as concerns over the impact of the Ukraine crisis and continuingly weak Eurozone recovery take their toll.
Retail sales in Italy continued to fall on a yearly basis. In January the yearly figure was down by -0.9%, adding to the -2.6% figure recorded previously. The figure was worse than the -0.72% decline expected by economists.
The Euro is likely to experience further volatility later in the session when a number of US data reports are released.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3800 ,
Euro,, Pound Sterling,0.8346 ,
Euro,,Australian Dollar,1.4950 ,
Euro,,New Zealand Dollar,1.6059 ,
Euro,,Canadian Dollar,1.5354 ,
[/table]
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