Yesterday’s high: €1.1099
Yesterday’s low: €1.1020
Euro Capitalises on Disappointing UK Data
Demand for the Euro deteriorated further on the back of a surprisingly sharp contraction in French industrial production.
As the industrial sector has failed to clock two consecutive months of growth over the course of the last year this weak showing added to worries over the underlying health of the French economy.
With domestic confidence in centrist President Emmanuel Macron already fading, this suggests that French growth may not improve as markets had hoped in the coming months.
The ongoing escalation of tensions between the US and North Korea also continued weighing on the Euro, as fears of a potential armed conflict remained heightened.
However, the GBP/EUR exchange rate was unable to capitalise on this softness for long.
An unexpected widening of the UK trade deficit highlighted the economy’s distinct vulnerability to any deterioration in trade conditions, prompting fresh Brexit-based jitters.
Further disappointment was also in store from the NIESR gross domestic product for the three months to July, which dipped from 0.3% to 0.2%.
This boosted speculation that the UK economy will remain under pressure throughout the latter half of the year, encouraging the Pound to trend lower across the board.
Euro Outlook: Final German Inflation Unchanged
The Euro experienced no movement following the release of Germany’s final inflation figures for July, with the figures being unchanged from previous estimates.
Any further deterioration in relations between the US and North Korea may shore up the GBP/EUR exchange rate in the short term.
However, the Pound is unlikely to see a significant improvement ahead of Tuesday’s UK consumer price index report.
With markets keen to gauge the state of UK inflation, and the chances of the Bank of England (BoE) taking a more hawkish turn, demand for the Pound is likely to remain muted.
07:00 German Consumer Price Index
07:00 German Gross Domestic Product
09:30 UK Consumer Price Index
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