Pound Euro Exchange Rate Could Dip On Tomorrow?s UK And Eurozone CPI Inflation Numbers

Published: Monday, 15 October 2012 18:00 BST - Written by David Woodsmith

STORY LINK Pound Euro Exchange Rate Could Dip On Tomorrow?s UK And Eurozone CPI Inflation Numbers

Stronger than anticipated us Advance Retail Sales data, released earlier this afternoon, caused a slight weakening of the US Dollar, taking the GBP USD exchange rate back up towards the 1.6100 level during this afternoon’s European equities session. The Greenback had been showing signs of weakening in the early part of today’s session, thanks to last night’s Chinese CPI Inflation data and Saturday’s Chinese Trade numbers, both of which provided global investors with reasons to be cheerful, adding to the current ‘risk-on’ trading environment.

Meanwhile, European Commission President Jose Manual Barroso did his best impression of an Oscar-winning actress when he addressed the European Parliament earlier today. Barroso described the Nobel Peace Prize, awarded to the EU last week, as a ‘great honour’, leading analysts of a more cynical bent to suggest that the organisation’s acceptance of the award might be a case of tempting fate. Bloody anti-austerity protests in Madrid and Athens in recent weeks have the potential to escalate during the early part of 2013, unless economic activity in the down-at-heal eurozone starts to show a sharp pick-up. Always beware hubris.

The Pound to Euro exchange rate will be afforded further direction tomorrow morning, as investors trawl over the latest UK and eurozone CPI inflation figures. Expectations are that the UK version of the headline inflation number will show that the rate of price rises in the British economy tumbled to 2.2% during last month. This would be perilously close to the UK government’s self-imposed target of 2.0%, giving the Bank of England renewed scope to loosen its already ultra-loose monetary policy stance. A bump to QE or a trimming of British interest rates could be on the cards sooner rather than later if the inflation figure fulfils expectations. Meanwhile, the eurozone’s counterpart number is expected to show that the rate of price rises in the region remained static at 2.7% last month, well ahead of where the region’s policymakers would like it to be. This, conversely, may tie the hands of the euroland’s central bankers with regard to an ECB rate cute before Christmas. The upshot could be further downward movement for the Pound to euro exchange rate.

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: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts