Euro to Pound (EUR/GBP) Exchange Rate Drops after Negative German Producer Prices
The Euro has softened against many of its peers today following a negative result from the German Producer Prices Index.
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The Euro to Pound exchange rate is currently trending in the region of 0.7983.
Yesterday was quiet for the single currency in terms of domestic data publications. A better-than-forecast non-seasonally adjusted Eurozone Current Account figure helped to curtail the softening Euro, as the hangover from last week’s set of poor Gross Domestic Product data still loomed menacingly.
In contrast; the economic calendar was heaped from a British perspective, but the results were not favourable to those backing Sterling. The year-on-year Consumer Price Index fell from 1.9% to 1.6%, with a contraction of 0.5% for the month of July. The Retail Price Index also saw unwanted declination from 256.3 to 256.0. The result of these less-than-ideal data releases was to see Sterling fall across the board, losing any gains made from Monday.
The Euro to Pound exchange rate has hit a low today of 0.7967.
Today has seen a reversal of fortune for the single currency. The year-on-year German Producer Price Index was forecast to remain at -0.7%. The actual data revealed a declination to -0.8%, falling by 0.1% in July.
Eurozone Construction Output also produced unsatisfactory results. Year-on-year Eurozone Construction Output dropped -2.3% following the previous advance of 4.4%. Construction Output declined by -0.7% on a month-on-month basis in June.
Conversely, Sterling has made gains across the board today following the publication of the minutes from the Bank of England’s most recent monetary policy meeting. Despite a majority vote to keep the Bank Rate at the current percentage, two of the nine members deviated from the norm having voted for an increase. The very fact that the vote wasn’t unanimous, unlike many meetings beforehand, suggests an increased likelihood of a rate hike taking place sooner-than-anticipated. For the majority of the committee there was ‘insufficient evidence of inflationary pressures to justify an immediate increase’. The two members who voted against the maintenance of the current rate argued that current economic circumstances ‘were sufficient to justify an immediate rise in bank rate’.
The Committee did vote unanimously regarding the stock of purchased assets, choosing to maintain the £375 billion figure.
Forecast for the Euro to Pound Sterling Exchange Rate
Tomorrow’s domestic data docket is fairly heavy from a European perspective.
The German composite, manufacturing and services PMI’s will all be of importance, especially considering the string of poor German domestic data results preceding. All the PMI’s addressed above are expected to fall from previous figures.
Eurozone composite, manufacturing and services PMI’s will also be of interest and are likely to spark market movement. Like the German data, the Eurozone PMI’s are all expected to decline from the previously posted figures.
The British domestic data calendar is also bulging tomorrow. Retail Sales is perhaps the most important of these data releases in terms of the potential for market movement. Retail Sales are expected to fall from 4.0% to 3.5%. Public Finances and Public Sector Net Borrowing may also be of interest to those backing the Pound.
Friday will be important for the Euro with a speech from European Central Bank President Mario Draghi at the Jackson Hole symposium. Traders will be focussed on every word in the hope to divine clues as to the timing of a rate hike.
The Euro to Pound Sterling has hit a high today of 0.8015.