The Euro (EUR) exchange rate was experiencing mixed trading against both the Pound (GBP) and US Dollar (USD) on Tuesday as market attention was focused on the conclusion of the US Federal Reserve’s two-day long policy meeting on Wednesday.
In a session devoid of any major European or UK data releases the Euro was experiencing mixed trading. Comments made by a deputy governor at the Bank of England put some pressure on the Pound but were not enough to send the EUR/GBP higher.
Bank of England deputy governor Minouche Shafik said that policy makers would need to see more signs of price pressures growing in the UK economy before they vote in favour of raising interest rates.
Economists have pared back their bets for a rate hike occurring this year, most now predict that a rate rise could occur next summer.
‘We would need to see more of the data pointing in the same direction in terms of price pressures- particularly in terms of wage and unit labour costs before raising interest rates,’ said Ms Shafik in an interview with the Financial Times newspaper on Monday.
The Euro weakened on Monday following the release of business confidence data out of Germany, which showed that sentiment in the 18-member currency blocs largest economy fell to its lowest level since 2012. The report did little to ease concerns over the health of the German economy.
Further losses for the Euro were restrained on Tuesday after European Central Bank chief economist Peter Praet told a Belgian newspaper that the bank sees no sign of deflation or recession in the Eurozone.
‘We can’t ignore the feeble economic climate. We are now seeing a loss of momentum. It is striking that growth is abating in an early phase of the business cycle. We take that seriously, but we should not exaggerate. Our base scenario for a gradual economic recovery is still realistic,’ Praet said.
Praets comments could ease concerns that the Eurozone is sliding towards a triple dip recession. However many economists remain unconvinced and cite the weakness of the German, French, Italian, and Spanish economies as the cause for the Eurozone’s weakness.
Unemployment and economic growth across the region remains a big concern and there are few signs that things will improve before the end of the year.
Euro Exchange Rate News:
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