Euro to Pound Exchange Rate (EUR/GBP) Drops, CAD & NZD Forecast To Gain

Modified: Thursday, 31 October 2013 13:58 BST - Written by Ben Hughes

STORY LINK Euro to Pound Exchange Rate (EUR/GBP) Drops, CAD & NZD Forecast To Gain

The EUR GBP exchange rate has given up ground this afternoon following an unexpectedly low print for this morning’s eurozone inflation numbers. The Canadian and New Zealand Dollars have fared significantly better on the day.

The Pound to Euro exchange rate (GBP/EUR) is currently trading up by 0.69% at 1.1760 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8503 EUR/GBP.

The euro to Sterling exchange rate has slumped since this morning’s publication of disappointing inflation data in mainland Europe. Analysts had been expecting September’s eurozone Consumer Price Index data to show at an annualised 1.1%, so the showing of 0.7% proved to be market moving, triggering a sell off for the single currency.

The number suggests that the eurozone economy may be heading towards a bout of disinflation – a troublesome phenomenon which sees consumer prices drift lower, causing economic participants to postpone big ticket purchases and eliciting a slowdown in general economic activity. In the nearterm the below-expectation eurozone CPI figure provides the European Central Bank with increased leeway to loosen its monetary policy – a development which is likely to weigh heavily on the single currency into the medium term.

Meanwhile, the Pound New Zealand Dollar exchange rate (GBP/NZD) has suffered sustained selling pressure following last night’s assertion by the Reserve Bank of New Zealand that it will be upping its Official Cash Rate next year. The news sent GBP NZD from rates above 1.9500 during yesterday’s North American session down into the low 1.9300s today.

Elsewhere, the Canadian Dollar’s comeback against the Pound continues, with the GBP CAD exchange rate peeling back to as low as 1.6731 this afternoon. Recent support for the Loonie has been accentuated by this afternoon’s domestic Gross Domestic Product numbers which revealed that the Canadian economy expanded by a year-on-year 2.0% in August. This was well ahead of the consensus expectation amongst economists of a 1.7% showing, meaning that the Canadian unit is likely to enjoy further upside as we head towards the weekend shutdown.

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TAGS: Canadian Dollar Forecasts Daily Currency Updates New Zeala Forecasts