Amelia Spencer
Affiliate Relationship Manager
Risks suggest ECB may not be ready to end stimulus measures in 2019
German Inflation figures released yesterday disappoint but remains above ECB target
Request a quoteAlthough the euro has performed well against the pound towards the latter part of the week, this is more than likely due to sterling weakness relating to Brexit uncertainty rather than euro strength. The euro too is facing economic concerns, which were bolstered yesterday when Economic Confidence figures were released lower for the eleventh consecutive month, bringing it to the lowest seen since May 2017. Although this was released slightly better than expectation, and Industry confidence rose, this still demonstrates a lack of consumer confidence in the Eurozone as a whole.
| Currency Pair | % Change in 1 month | Difference on £200,000 | |
|---|---|---|---|
 GBP |  EUR | 2.8% | €6,350 |
President of the European Central Bank Mario Draghi, had mentioned the ‘prominent’ risks to the European economy earlier this week, and concerns have been mounting that the ECB may not be able to scale back its stimulus measures as it had planned, as hopes of a rebound from its slowdown in Growth are yet to be seen.
However German Inflation data was released yesterday and showed expansion, although at a slower pace than in November. It held strong above the ECB’s target of just below 2% for the Eurozone as a whole. This provided some confidence to investors and supported the Central Bank’s decision to gradually slow down its Quantitative Easing programme with a view to ending the huge bond buying programme at the end of this year.
ECB releases Financial Stability Report
The ECB released its bi-annual Financial Stability report yesterday, which showed that the European financial system could cope well in the event of a financial crisis. However the report showed that factors such as the US Federal Reserve raising interest rates, US trade tariffs and Brexit were all areas of concern, but that they could only have a limited impact to the banking sector.
A number of key economic data releases have the capacity to move euro exchange rates this morning, including Unemployment Rate and preliminary Inflation figures in the form of Consumer Price Index. Both releases are expected to show a fall which could result in swings on euro exchange rates in either direction, therefore clients could benefit from getting in touch to capitalise on spikes as they happen.
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