Pound Euro Exchange Rate Plunges to 1.1920 GBP/EUR; Euro Forecast Looks on Today's German Survey

March 25, 2014 - Written by Tim Boyer

STORY LINK Pound Euro Exchange Rate Plunges to 1.1920 GBP/EUR; Euro Forecast Looks on Today's German Survey

The major move from global currency traders during yesterday’s North American session came in the Pound euro exchange rate market. The pair plunged to 1.1920 GBP/EUR just after the New York close as market participants priced in this morning’s UK Consumer Price Index inflation numbers which are expected to show that the rate of British price rises slumped to 1.7% last month – down again from January’s showing of 1.9% which was itself below the British government’s stated target.

With the UK economy showing distinct signs of improvement in recent months, most analysts are pricing in an increase to the Bank of England base rate some time during the first half of 2015. However, a print anywhere south of 1.7% from the Office of National Statistics data this morning would be sure to stoke rumours that the UK PLC is heading towards a damaging bout of deflation, making any domestic interest rate rise a far more distant possibility. Yesterday evening’s move out of Sterling by institutional investors looks like a defensive play aimed at avoiding any potential selling pressure on the Pound later today.

Looking at the other side of the GBP/EUR coin, this morning’s IFO survey of German economic participants also has the potential to be market-moving. The single currency remains massively dependent upon a continued strong performance from the Teutonic economy, so a strong showing from this morning’s numbers could readily send the GBP/EUR exchange rate down through the 1.1900 threshold.

Elsewhere, a brace of data releases in the States provide the highlight of this afternoon’s session. This month’s US Consumer Confidence survey is of obvious importance – look for the Dollar to lose ground if it doesn’t show an improvement from last month’s print – however, it is February’s US New Home Sales print, (due for publication at the same time), which could be of even greater significance. The Greenback badly needs evidence that the American housing market is emerging from its post-2008 slump in order to move forward in earnest.

Key Pound Sterling / Euro Exchange Rates (Publish: 9AM GMT 25/03/2014)

The Pound Sterling to Euro exchange rate is trading down -0.03% at 1.19195 GBP/EUR.
The Euro to Pound Sterling exchange rate is trading up +0.03% at 0.83896 EUR/GBP.

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