Pound Euro Exchange Rate Depends On German Inflation Data Today

Modified: Wednesday, 28 November 2012 08:54 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Depends On German Inflation Data Today

Yesterday’s afternoon session saw the release of yet more encouraging data from the US in the form of the latest domestic Consumer Confidence survey, which revealed that optimism amongst American economic participants has reached its highest level for almost five years. Exactly why this has happened, given the deep set problems in the US labour and housing markets, is unclear. However it appears likely that American workers are feeling more secure in their jobs than they were last month.

The main function of improved consumer sentiment is traditionally stronger shop sales and this certainly proved to be the case earlier this week, with Monday proving to be the busiest ‘Cyber Monday’ since the advent of internet shopping. The notion of ‘Cyber Monday’ dates back to when internet shopping was in its infancy and shoppers’ home internet connections were not reliable enough to carry out online transactions. This led consumers to wait until Monday morning to affect their purchases online using their work internet facility. With Christmas fast approaching and the four day Thanksgiving lay-off providing a fallow period which afforded shoppers time to come up with gift ideas, the final Monday in November emerged as the busiest day of the year for internet transactions. The strong demand registered this Monday provides encouragement that the American populace may be able to spend their way out of their nation’s current economic slumber. Yesterday afternoon’s US Consumer Confidence survey increases to hopes that this may be possible.

Selling pressure on the US Dollar has been maintained during the past 24 hours, partly thanks to yesterday afternoon’s positive US data, keeping the GBP USD above the psychologically key 1.6000 level.

Looking ahead to today’s session, the highlight of the daily data roster comes this afternoon in the form of the latest German CPI inflation data for this month. Analysts are anticipating an annualised showing of 1.9%, down from October’s 2.0% reading. If the German inflation data fails to show a dip in the persistent rate of domestic price rises, then the euro may enjoy further support, as analysts will downgrade their expectations regarding the chances of a further trimming of interest rates by the European Central Bank. This could see the GBP EUR exchange rate build on its surprise gains of yesterday.

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