The Pound (GBP) to Euro (EUR) exchange rate was little changed on Wednesday as data highlighted falling UK shop prices, which could lead to Bank of England policy makers refraining from raising interest rates from the record low level of 0.5%.
Most currencies were under pressure midweek as risk aversion came to the fore. Tuesday’s International Monetary Fund report, which showed that it has revised its global growth forecasts lower raised concerns over the state of the global economy.
The IMF said it is now forecasting global economic growth of 3.3% this year, down from 3.4% in July and expects growth of 3.8% in 2015, compared to an earlier prediction of 4.0%. It also warned that global growth might never reach its pre-crisis levels ever again.
Demand for safe haven assets such as the Japanese Yen and US Dollar increased as a result.
On Wednesday, the Pound came under pressure from data releases, which saw the currency, give up ground and briefly slip to a 3-week low against the Euro.
A report released by the British Retail Consortium showed that UK shop prices reported deflation for a 17th consecutive month. Prices fell by 1.8% from the previous figure of 1.6%.
The BRC-Nielsen Shop Price Index showed that non-food industries (including clothing and footwear) reported acceleration in deflation of 3.2% in September from 2.9% in August.
The report softened the Pound as it eases pressure on the Bank of England (BoE) to raise interest rates.
A separate report showed that house price inflation may have peaked and market prices are likely to cool over the coming months. The report released by Halifax showed that house prices increased by £1,100 in September but showed that prices are likely to soften as the year ends. Confidence amongst homebuyers has fallen to its lowest level in 15 months.
Pound to Euro Exchange Rate Forecast
The Euro meanwhile saw little movement due to a lack of market moving data releases but remained under pressure from Tuesday’s disappointing German economic data.
Also weighing on the currency were concerns that the deadly Ebola virus has spread in Europe. News broke on Tuesday that a Spanish nurse had become the first person to contract the virus outside of West Africa.
Further losses for the single currency were restrained as traders focused their attention on the release of the latest US Federal Reserve Policy Meeting Minutes.
UPDATE
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2676.
The minutes from the most recent Federal Reserve policy meeting had a particularly dovish tone causing a US Dollar decline. The single currency has benefitted from the Dollar demise.
Concerns over the slow rate of foreign economic growth, Eurozone issues and the Strength of the US Dollar caused policymakers to call for patience when considering the timing of a benchmark rate increase.
Yet more disappointing German data hasn’t been enough to outweigh the influx of trade after increased negative sentiment towards the US Dollar.
Sterling has softened across the board as traders await the Bank of England rate decision due later on Thursday.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2665 ,
Euro,, Pound Sterling,0.7874 ,
Euro,,Australian Dollar,1.4412 ,
Euro,,Canadian Dollar,1.4146 ,
Pound Sterling,,Euro,1.2698 ,
US Dollar,,Euro,0.7896 ,
[/table]
