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Euro Struggles as Eurozone Economy Shows Fresh Loss of Momentum

Last week’s high: €1.1475

Last week’s low: €1.1365

 

Underwhelming Eurozone Inflation Data Supports GBP/EUR Exchange Rate

Although the Eurozone unemployment rate fell to a fresh nine-year low this was not enough to significantly boost the Euro last week.

In another blow to hopes of a more hawkish European Central Bank (ECB) outlook the Eurozone consumer price index core measure failed to strengthen as forecast in March.

This suggests that inflationary pressure within the currency union remains rather weaker than policymakers would like, limiting the odds of any greater push for monetary tightening.

The GBP/EUR exchange rate was able to capitalise on this disappointing result, especially as Eurozone services and retail PMIs also fell short of forecast.

However, as March’s UK services PMI significantly under performed market expectations the mood towards the Pound soon soured.

As UK economic activity showed signs of slowing on the month this encouraged speculation that the first quarter gross domestic product could fall to 0.3%, weighing down GBP exchange rates.

Euro Outlook: Wider Eurozone Trade Surplus Could Boost EUR Outlook

Further developments in the unfolding US-China trade dispute could provoke additional volatility for the GBP/EUR exchange rate this week.

Focus will also fall on the latest Eurozone trade balance figure, with forecasts pointing towards a sharp widening of the surplus on the month.

As long as markets see signs that the domestic economy remains in a fairly strong state of growth the appeal of the Euro is likely to improve.

However, any disappointing data could weigh heavily on EUR exchange rates, giving the ECB further reason to leave monetary policy on hold for longer.

The GBP/EUR exchange rate could come under pressure, meanwhile, if the NIESR gross domestic product estimate suggests that quarterly growth eased to 0.3%.

 

Key Events

9th April

09:30   Eurozone Sentix Investor Confidence Index

11th April

09:30   UK Visible Trade Balance

12:00   UK NIESR Gross Domestic Product Estimate

12th April

10:00   Eurozone Industrial Production

13th April

10:00   Eurozone Trade Balance

 

Jessica Coot

Currency Trader

Tel: 01442 892062

 

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