All eyes are firmly on the European inflation data today in what has been an extremely quiet week in terms of data from the Eurozone. During a quiet week for the Euro in terms of data, the market report below discusses the inflation data release for the EU as well as other factors currently impacting the Euro. Below you will see the range of exchange rates between Sterling and the Euro during the high and low points of trading yesterday.

Currency Pair% ChangeDifference on £200,000

However, this could be set to change this morning as the latest consumer price index data and has the potential to cause movement on Euro exchange rates. Expectation is for the yearly rate of inflation to hit 2%, however, higher oil prices of late have caused global central banks to re-evaluate their inflation outlook.

If this is the case and inflation overshoots estimates then I would expect the Euro to benefit, especially against and already weak Pound following political turmoil in the UK. If Eurozone inflation doesn’t reach expectations, I’d expect to see the Euro lose ground against Sterling and the Dollar as it would cast a doubt over Draghi’s expectation to be able to raise interest rates at some point in 2019.

Brexit No Deal Concern Forcing Action

UK-EU relations

As previously mentioned, this week is a quiet week for the Eurozone in terms of data, therefore it may be a good idea to consider future UK-EU relations. Michel Barnier is expected to meet the new Brexit secretary later this week and spent most of his morning yesterday discussing scenarios with the House of Lords’ EU committee.

Whilst this has no bearing on the outcome in the Lords, his relationship with Barnier could set the tone for future negotiations with Brussels and the state of play with UK politics. The weeks Brexit negotiations as expected to draw to a close on Thursday as Dominic Rabb discusses his new role and the current stance in UK-EU talks.

Whilst this isn’t expected to have a major affect on exchange rates, a hard stance from the Brexit minister and a breakdown in talks is likely to benefit the Euro against the Pound longer term in my opinion.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.