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German Economy Battered, but GBP/EUR Exchange Rate Falls

Last  week’s high: €1.1326

Last week’s low:  €1.1240

 

Euro Slumps on Disappointing German Industrial Production and Exports

Last Monday saw data reveal the Eurozone’s manufacturing sector continued to slow as the bloc’s manufacturing PMI fell from 47.9 to 47.7.

Meanwhile, on Tuesday data revealed the Eurozone’s annualised inflation rate was 1.2% in May, the smallest increase in 13 months, which caused the single currency to slide against Sterling.

On Thursday the European Central Bank (ECB) left interest rates unchanged as the bloc struggled with low growth and weak inflation.

The bank pledged to keep rates at the current record low until the first half of 2020. The ECB also slashed its growth forecast for 2020 from 1.6% to 1.4%, while increasing its 2019 forecast from 1.1% to 1.2%.

The single currency relinquished some of its gains against Sterling on Friday as data showed Europe’s largest economy continued to show signs of vulnerability. German industrial output and exports slipped further than forecast, exposing fears about the Eurozone’s largest economy.

 

EUR Outlook: Stronger Inflation Data to Buoy EUR?

The start of this week’s session will see the release of April’s UK GDP reading, which could weigh on Sterling if data reveals that growth at the start of the second quarter is weak.

Meanwhile, if further reports suggest that the European Union will hit Italy with disciplinary action over its failure to respect spending rules, the single currency could remain under pressure.

 

Key Events

10th June

09:30   GBP Industrial Production (April)

09:30   GBP Manufacturing Production (April)

09:30   GBP GDP (April)

 

11th June

09:30   GBP UK Average Earnings (April)

09:30   GBP UK Unemployment Rate (April)

 

13th June

07:00   EUR German Harmonised Index of Consumer Prices (May)

10:00   EUR Industrial Production

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

 

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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