The Euro to Pound (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates are trading within a tight range today after a slew of Eurozone economic data was released.
Update: Friday morning has seen the Euro to Pound Sterling (EUR/GBP) exchange rate trending around 0.20% higher, in the region of 0.8709. The Euro to US Dollar (EUR/USD) exchange rate is trending in a tight range in the region of 1.1342. Data out of the Eurozone and US yesterday added weight to speculation that a global slowdown is on the way. Manufacturing in the Eurozone took a sharp decline, which spurred fears the European Central Bank (ECB) would soon have to intervene with stimulus measures–not long after ending its massive sovereign bond-buying programme. Meanwhile, US Durable Goods Orders came in below forecasts, despite expectations for a boost. In the UK, the Pound exchange rate has fallen as Brexit hopes are fading. EU sources have suggested that a Brexit deal breakthrough won’t be made at the weekend in Egypt as many had hoped.
Markit revealed that German manufacturing had slipped further into recession in February, with the Manufacturing Purchasing Manager’s Index (PMI) coming in at 47.6, falling from January’s 49.7 and expectations for a rise to 49.9. The Eurozone Manufacturing PMI also took a tumble, dropping from 50.5 to 49.2 –the first contraction in five years.
Chief Business Economist at Markit, Chris Williamson, said:
‘The Eurozone economy remained close to stagnation in February. The flash PMI lifted only slightly higher during the month, continuing to indicate one of the weakest rates of expansion since 2014. The survey data suggest that GDP may struggle to rise by much more than 0.1% in the first quarter.
‘The weakness is being led by manufacturing, which has now entered its first downturn since mid- 2013. With factory order books deteriorating at an increased rate, the rate of contraction in the goods- producing sector will likely worsen in coming months.’
The Eurozone’s worsening economic picture is raising concerns as to whether the central bank might have to intervene to help boost economic growth at some point.
Update: ECB Minutes Show Bank’s Concerns, but Unlikely to Make Changes in March
The release of the European Central Bank’s meeting minutes showed policymakers had growing concerns. However, it’s thought unlikely the central bank will blink at its March meeting and make any immediate changes to its monetary policy. It’s expected new projections will be made available in the March meeting which may help offer some indication as to whether the downturn in the currency bloc will be fleeting, or a more permanent fixture.
Pound Exchange Rates (GBP/EUR, GBP/USD) in Tight Range as Brexit Continues
Meanwhile, in the UK, ecostats showed the biggest-ever monthly public finances surplus, offering the government some support ahead of the March 29th Brexit day. Brexit developments are likely to be Sterling’s key driver in coming weeks as Theresa May attempts to create a deal which will be voted through in parliament. However, with a number of Labour and Conservative MPs quitting this week, the pressure’s on to save her Brexit deal, before parliament take control of proceedings.
EUR/GBP and EUR/USD Exchange Rate Forecasts Today
The European Central Bank (ECB) will release its accounts of the Governing Council’s January meeting this afternoon which may influence the Euro to Pound (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates. Meanwhile, Brexit negotiations and developments are likely to continue influencing Sterling.
Across the Pond, the US Durable Goods Orders stats will be out this afternoon, with a rebound in December forecast. The previous month’s figure resided at 0.70%, but December is expected to show a more upbeat 1.80% which could support the US Dollar exchange rates (USD/EUR, USD/GBP). However, any developments in trade talks with China may also influence the Greenback.
The Euro to US Dollar (EUR/USD) exchange rate is trading at levels of 1.1354. The Euro to Pound Sterling (EUR/GBP) exchange rate is trading at 0.8682.