The Euro could see an interesting end to the week following EU Consumer Price Index (CPI) inflation data which is released tomorrow morning. European inflation is being very closely monitored by the European Central Bank at the moment as it is a key indicator of the performance of the EU and ultimately determines when the ECB will terminate its asset purchasing programme in full. EU inflation has been performing much better in recent months and any jump higher could see the Euro strengthen even further. Expectation is for a small drop to 1.2% down from 1.3% which could put pressure on the Euro although a stronger number cannot be ruled out. Those clients looking to buy or sell Euros are likely to see a reaction on the back of the data. Industrial production numbers released yesterday arrived weaker than expected having contracted by 1% in January.
Rates for GBP EUR broke over 1.13 earlier today potentially finding a new level of support amidst all the Brexit developments. The ongoing Brexit negotiations in my view will continue to be the main driving force for sterling exchange rates in these coming months. The second round of talks are due to be completed at the time of the next EU summit 22nd & 23rd March and there could be heightened volatility around this time.
After this is concluded the talks will move on to the toughest part which includes the future trading relationship. GBP EUR rates could come under significant pressure at this time. Any hardening of stances is likely to see the pound weaken as the prospect of a no deal scenario is still a possibility. To date, every time there has been talk of a no deal outcome the pound has dropped substantially.
For more information about sterling or Euro exchange rates then please get in touch with me James at firstname.lastname@example.org