The Pound Sterling to Euro (GBP/EUR) exchange rate dropped in Tuesday’s European trading after the UK Consumer Price Index slipped to its lowest level since its creation in 1989; inflation tumbled to 0.0%.
The Pound Sterling exchange rate is likely to remain soft in Tuesday’s European session as a result of the weaker-than-forecast ecostat, which economists expected to fall to 0.1% from 0.3%.
Prime Minister David Cameron stated: ‘Inflation is running at 0.0% – the lowest on record. It’s good news for family budgets and a sign our long term plan is working.’
Meanwhile, the Euro was offered some support when German and Eurozone Services, Manufacturing and Composite Purchasing Managers Indexes (PMI) printed above forecasts in March.
German and Eurozone PMI’s Pull Euro (EUR/GBP) Exchange Rate Higher
Germany’s Manufacturing PMI reached 52.4 from February’s 51.1, while the Services PMI hit 55.3 from the previous 54.7. Therefore the Composite measure increased to 55.3 from 53.8. The Eurozone Composite PMI hit 54.1 from 53.3.
Markit’s chief economist Chris Williamson commented: ‘The Eurozone’s economic recovery gained further momentum in March, with the PMI hitting its highest for almost four years. The improvement provides welcome news to a region awaiting signs that the ECB’s [European Central Bank’s] quantitative easing is stimulating the real economy.’
However, one factor weighing on the Euro at the moment is the situation between Greece and its creditors.
Industry expert and billionaire philanthropist George Soros has now forecast a 50/50 chance that Greece will leave the Eurozone.
Soros stated: ‘It’s now a lose-lose game and the best thing that can happen is actually muddling through… Greece is a long-festering problem that was mishandled from the beginning by all parties.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The Pound Sterling to Euro (GBP/EUR) exchange rate could be in for an interesting day on Wednesday with the release of German IFO Business Climate, Current Assessment and Expectations ecostats. Additionally, UK BBA Loans for House Purchase figures will also emerge.
Thursday will also be a day of GBP/EUR movement with UK Retail Sales and CBI Reported Sales stats released. German GfK Consumer Confidence is also due out.
Furthermore, any developments in negotiations between Greece and its creditors could see the Euro fluctuate.
The Euro to Pound Sterling (EUR/GBP) exchange rate is trading at 0.7351. The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3608.
