The Euro ticked higher against the Pound on Monday after data showed that inflation in the Eurozone stayed at 0.5% in June, a figure which is less than half of the European Central Bank’s 2% target.
According to the Luxembourg based European Statistics Office, consumer prices grew by 0.5% in June, matching last month’s figure. The data also matched economist forecasts. Surprisingly core inflation increased unexpectedly.
With the ECB due to hold a policy meeting later in the week investors will be watching to see if policy makers will introduce further measures to try and boost inflation. Some are speculating that a quantitative easing programme could be announced.
As inflation remains at less than half the ECB’s target of 2% for a ninth consecutive month, ECB President Mario Draghi has prepared investors for the prospect that further stimulus measures could be introduced should the threat of a negative price spiral remain.
“This data keeps the pressure on the ECB to keep the door open to further policy easing. It’s premature to suggest that this downside risk of Europe sliding into Japan deflation territory has vanished. It’s still a fragile economic situation,” said a senior economist at the Amsterdam based ING Groep NV.
Investors widely ignored data released earlier in the session which showed that German Retail sales fell unexpectedly in May. According to the data sales in the Eurozone’s largest economy fell by 0.6% in May, below forecasts for a rise of 0.7%. The drop adds to the 1.5% decline recorded in April.
The Euro to GBP exchange rate is trading around 0.8021 – 30/06/14.
The Pound meanwhile was softened by the release of a report which showed that UK mortgage approvals dropped in May to its lowest level in almost a year.
Mortgage approvals dropped from 62,806 to 61,707, below forecasts for a figure of 61,800. The data suggests that stricter lending rules are dampening demand and cooling the UK’s property market.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3652 ,
Euro,,British Pound,0.8021 ,
Euro,,Australian Dollar,1.4529 ,
Euro,,Canadian Dollar,1.4572 ,
[/table]
