UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.4%, whilst the Euro to US Dollar (EUR/USD) exchange rate ticked higher by around 0.1% on Wednesday morning.
As traders await Eurozone Construction Output data, the single currency edged higher versus most of its major peers. This is partly demand for financing assets, but also in response to safe-haven demand as falling crude prices weighs on investor sentiment.
Meanwhile, the Pound extended losses initiated by weak core inflation data but could see a swift recovery if labour market data prints positively. Safe-haven demand has supported the US Dollar but gains have been somewhat slowed thanks to Euro strength.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7808.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1145.
Yesterday….
Euro to Pound Sterling (EUR/GBP) Conversion Rate Predicted to Trend within a Tight Range after UK Inflation Data Produced Mixed Results
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a limited range on Tuesday morning.
The Euro began Tuesday’s European session on the back foot after yesterday’s improved market sentiment saw demand for financer assets wane considerably. However, positive domestic data saw the single currency wipe daily losses to trend narrowly against both the Pound and the US Dollar. February’s Eurozone Economic Sentiment Index was predicted to fall from 22.7 to 10.3, but the actual result only fell to 13.6. In addition, February’s German Economic Sentiment Index bettered the median market forecast drop from 10.2 to 0, with the result coming in at 1. This is clearly still weak data, however, with economic sentiment in the Eurozone falling considerably.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7726.
Across the Channel, the British Pound erased daily gains after inflation data produced mixed results erring towards negativity. Whilst January’s Consumer Price Index equalled the median market projection of a rise from 0.2% to 0.3% on the year, the monthly figure contracted beyond expectations. Additionally, January’s Core Inflation Rate failed to meet with the market consensus of a drop from 1.4% to 1.3% by falling to just 1.2%. With low inflation one of the major stumbling blocks preventing the Bank of England (BoE) from hiking the overnight cash rate, these latest results will likely cause further delays to tighter monetary policy.
Euro to US Dollar (EUR/USD) Conversion Rate Predicted to Trade Statically ahead of US Housing Market Index
The Euro to US Dollar (EUR/USD) exchange rate was trending within a narrow range on Tuesday morning.
Commenting on the German economic sentiment report, Research Analyst at ING Carsten Brzeski stated; ‘Against the background of the latest market turmoil, this drop in investors’ sentiment is anything but a surprise. Tumbling stock markets, a stronger Euro and more general concerns about the global growth outlook have clearly dented optimism about the German economy’s growth prospects.’
Brzeski added; ‘With growing despair and fears of monetary policy’s impotence, the ECB will either have to decide on new bold and unprecedented measures or revert to “more-of-the-same”. Given institutional, legal and political constraints, the “more of the same” option seems in our view the most likely one for the March meeting.’
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1177.
Although demand for safe-haven assets improved on Tuesday amid concerns that the People’s Bank of China’s (PBoC) intervention will not be enough to shake off slowing economic growth, the US Dollar has failed to appreciate significantly. This is likely to be due to fewer traders betting on a near-term Federal Reserve rate hike. Later today, the US Housing Market Index has the potential to cause US Dollar changes.
Euro Exchange Rate Forecast: ECB Minutes to Dominate Trader Focus
Given the mounting uncertainty as to how the European Central Bank (ECB) will approach monetary policy in March, the account of the most recent policy meeting should provide some clues. Therefore Thursday’s minute’s publication is likely to cause significant EUR volatility. Market sentiment, oil prices, Chinese data and US data should all also impact the Euro over the coming days.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7693 to 0.7746.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the range of 1.1144 to 1.1193 during Tuesday’s European session.
