EUR Forecast: Euro Exchange Rate To Gain Against GBP & USD Following Inflation Data

Modified: Tuesday, 16 April 2013 13:03 BST - Written by David Woodsmith

STORY LINK EUR Forecast: Euro Exchange Rate To Gain Against GBP & USD Following Inflation Data

This morning’s UK CPI Inflation data showed a levelling off in the rate of British prices last month. The headline measure of UK inflation remained at the same level as February’s showing printing at exactly the same year-on-year level last month. The ‘no change’ figure of 2.8% was anticipated by analysts, however the Bank of England is sticking by its prediction of earlier this year that the official rate of British inflation will break back above the 3.0% level later this year for the first time since the early part of 2012.

With British CPI inflation consistently remaining above the government target of 2.0%, it appears that the Bank of England’s monetary policy committee will remain reticent to extend its £375bn Quantitative Easing programme for fear of stoking the flames of a self-perpetuating inflationary cycle.

Elsewhere, the euro zone’s counterpart inflationary figure for March, released a little later this morning, showed at a slightly higher than anticipated annualised rate of 1.5%. This was significantly higher than February’s 1.3% showing, suggesting that any further near-term loosening of monetary policy by the European Central Bank also remains unlikely. The euro has benefitted as a consequence, sending the Pound to euro exchange rate (currency : GBP/EUR) all the way down to 1.1657 during the middle part of today’s European equities session.

Meanwhile, the pronounced volatility which marked yesterday’s session in the foreign currency markets, has abated so far today. A lack of military testing by North Korea yesterday has allowed global risk sentiment to improve, while yesterday afternoon’s bloody scenes at the finish line of the Boston Marathon appear to be an isolated incident rather than a concerted terrorist attack on mainland USA. Although the ‘risk off’ trading environment prevails, the wild swings in the GBP AUD, GBP NZD and GBP ZAR exchange rates appear to have come to an end, for now at least.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts