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Euro Boosted by German Trade Data

Yesterday’s high: €1.1202

Yesterday’s low: €1.1167

Germany Continues to Impress with Widened Trade Surplus

The single currency got a fresh boost from August’s German trade data yesterday, with the surplus found to have widened from 19.3 billion to 20.0 billion.

This suggests that the Eurozone’s powerhouse economy remains in a robust state of health.

Even though coalition talks are likely to take some time yet – casting a degree of uncertainty over the German economy – this does not appear to be a major threat to domestic growth in the near term.

As a result the Euro remained on a bullish footing against its rivals, even as anticipation built ahead of Catalan president Carles Puigdemont addressing the regional parliament for the first time since the independence referendum.

Tuesday’s raft of UK data proved rather mixed, meanwhile, limiting the strength of the GBP/EUR exchange rate further.

Markets were not impressed to find that the UK trade deficit had widened further than forecast in August, especially as the data highlighted the economy’s heavy reliance on trade with the EU.

However, as the latest industrial and manufacturing production figures surprised to the upside, this prevented the Pound from slumping sharply.

Euro Outlook: Markets Look to ECB Commentary

As today is a rather data-light day the GBP/EUR exchange rate may struggle to find any particular direction.

Even so, as domestic political developments remain a major driver of both Pound and Euro sentiment the potential for further volatility is still there.

Any signs that Brexit talks are making positive progress could offer support to GBP exchange rates, although the chances of any major breakthrough still look decidedly slim.

On the other hand, if the UK and EU negotiating teams appear to remain as much at odds as ever this is likely to put significant pressure on the Pound.

Commentary from European Central Bank (ECB) chief economist Peter Praet may boost the Euro tonight, providing he takes a less dovish tone on monetary policy.

If Praet offers an indication that the ECB is shifting towards a more optimistic outlook this could give EUR exchange rates further cause for confidence.

Key Events

11th October

19:50 ECB’s Praet Speaks in New York

 

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Joe Mayhew

Currency Dealer

T: (0) 1442 892 069

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