Euro to Pound Sterling Exchange Rate EUR GBP Slides on Disappointing German Business Survey Figures

Modified: Thursday, 25 February 2016 13:00 BST - Written by John Cameron

STORY LINK Euro to Pound Sterling Exchange Rate EUR GBP Slides on Disappointing German Business Survey Figures

Disappointing German IFO Data Caused the Euro to Decline Today

The focus of currency market participants swung away from the Pound Sterling (currency : GBP) following yesterday’s dire performance from the UK unit and onto the euro (currency : EUR) during early trading today.

The driver for this came from Germany in the form of the latest IFO Business Confidence survey which revealed a fall in sentiment for the third month on the trot. Analysts had been anticipating a result of 106.8 from the ‘Business Climate’ element of the survey, so the outcome of 105.7, (down from last month’s print of 107.3), came as a body blow to the shared currency.

The Sterling euro exchange rate had been changing hands in the middle part of the 1.2700 – 1.2800 range in the lead up to the German data release, as the Pound continued to be weighed down by fears that UK voters might be about to opt to exit the European Union. However, the poor confidence survey hit the euro hard and the GBP EUR tracked Northwards towards the 1.2900 threshold as the session progressed.

Analysts noted that today’s IFO survey had shown the sharpest monthly decrease in German corporate confidence since the financial crash of 2008.

FX insiders now forecast that the euro may incur further near-term losses as a result as investors price-in an apparent slowdown in the euroland’s premier economy. Hans-Werne Sinn of IFO added to the mood of pessimism enveloping the shared currency earlier, noting that, ‘the majority of companies were pessimistic about their business outlook for the first time in over six months.’

BoE Dovish Comments put Additional Pressure on Pound Sterling

Elsewhere, the Bank of England (BoE) Governor Mark Carney faced the UK parliament’s Treasury Select Committee earlier today.


The BoE Chief heaped further pressure on the Pound by confirming that his monetary policy committee would consider cutting its benchmark interest rate from its current record low of 0.50% if economic conditions warranted such a move.

However, he did offer investors holding Sterling one crumb of comfort by asserting that it was ‘unlikely’ that UK rates will go below zero, saying that the Monetary Policy Committee (MPC) had not considered it as an option.

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TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts