German and Spanish consumer prices both showed promising signs yesterday, after both economies reported running close to the European Central Bank's 2% inflation rate target. The Euro report below discusses this week's economic data and the current uncertainty in Italy. The range of exchange rates for GBPEUR are shown in the table below, highlighting the importance of timing your transfer to maximise on your return.

Currency Pair% ChangeDifference on £200,000
Euro to US Dollar Exchange Rate Hits 2-Year Highs

This keeps the door open for the European Central Bank to unwind its quantitative easing program. The German inflation figures carry a large significance as these figures make up the largest amount of the consumer price index for the Eurozone as a whole, which is due to be released this morning.

Whilst this morning’s inflation data isn’t expected to bring fireworks, the euro could start to gradually claw back some ground against its counterparts if any news is given as to when the ECB are likely to fully unwind its asset purchasing program, although I would largely expect this at next month’s ECB monetary policy meeting.

Furthermore, consumer confidence figures were released yesterday and these figures were less optimistic. Underlying fears surrounding unemployment is on the rise in households according to the report.

Whilst this data did little to move the markets, the fears of unemployment could feed through into the Euro’s value if it starts to affect people’s ability and decisions to spend incomes.

Euro risk: Italian Politics

The Italian Prime Minister has denied claims that the has asked the ECB to help with bond purchases according to reports. My colleague James’ report yesterday covered the issue that this could create as the ECB is looking to unwind its QE program, as discussed in my previous section. The debt situation could cripple the Italian economy and even lead to a potential fall out of the Euro.

Inflation data today

Politics aside, the Eurozone Flash Consumer Price Index figure will be released and as explained previously is of major interest to investors. If this figure falls in line with expectations from Germany and Spain then we could see the Euro hold firm. If these figures point to a slowdown, I would expect to the Euro weaken dramatically.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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