The Euro to Pound (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates firmed on Monday due to speculation that the single currency’s run of declines was overdone and as oil prices rose.
German Data Disappoints
Early in the session, the Euro came under pressure as data released in Germany showed that import prices in the Eurozone’s largest economy fell at a faster rate in November. The cause for the fall was the sharp decline in oil prices.
According to the Federal Office of Statistics, Germany’s import price index fell to 2.1% year on year, a sharper fall than the 1.6% drop seen in the preceding month. On a month on month basis import prices fell by -0.8%, a sharper decline than the -0.5% figure forecast by economists.
Euro/ US Dollar (EUR/USD) exchange rate moves away from 2-year low
As the session progressed, the Euro found support from rising oil prices and speculation that the currency’s recent declines have been overdone. Against the US Dollar, the Euro firmed away from a two year low and firmed against the Pound.
Oil prices increased after Saudi Arabia said that it expects prices to rally over the coming months due to increased demand from global economic growth.
‘The oil market will recover. Fossil fuel will remain the main source of energy for decades to come,’ said U.A.E Energy Minister Suhail Al Mazrouei.
Euro/ Pound Exchange Rate Rises for First Time in Five Days
The Euro managed to advance against the Pound as the rise in oil prices reduce concerns that a decline in the oil exporting Russian economy would put more pressure upon the Eurozone economy.
‘The Pound’s move against the Euro is more about the Euro. Oil prices rebounded alongside the Ruble. It seems concern about Russia’s economic outlook has eased and that supported the Euro. We expect the Pound to strengthen against the Euro longer term,’ said Lee Hardman, a foreign exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.
The Euro could make further gains later in the session if upcoming Eurozone consumer confidence data comes in positively. Economists are forecasting that confidence across the region improved slightly in December.
Greece Vote Forecast to Weigh on Euro
The Euro is forecast to weaken over the Christmas break depending on the outcome of Tuesday’s second round of Greek presidential elections. The Greek parliament failed to vote in favour of Prime Minister Antonis Samara’s candidate last week and now he has just two more chances to secure a win for his candidate. Under the Greek constitution, if no agreement is reached after a third vote than the nation will have to hold a snap general election, a vote that the government is not expected to win.
Trading volumes are also expected to be light this week due to many market participants being absent due to Christmas holidays.
Euro Exchange Rate News:
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