Key Takeaways
- EUR/GBP is trading slightly lower on Friday, but maintains a strong weekly uptrend.
- The Euro is supported by positive sentiment surrounding the European Central Bank’s (ECB) monetary policy.
- The British Pound is under pressure due to concerns about the UK’s public finances and revised productivity growth forecasts.
- Policy divergence between the ECB and the Bank of England (BoE) suggests potential continued consolidation for EUR/GBP.
Market Snapshot: EUR/GBP Movement
The EUR/GBP currency pair is experiencing a slight decline on Friday, hovering around the 0.8780 mark, representing a 0.13% decrease for the day. Despite an early reversal of daily gains, the pair continues to exhibit a robust weekly uptrend, climbing approximately 0.60%. The Euro is finding consistent support against the British Pound, which is facing headwinds due to persistent concerns regarding the United Kingdom’s public finances. Conversely, optimistic statements from the European Central Bank (ECB) are bolstering investor confidence in the Euro.
European Central Bank’s Stance
On Thursday, the ECB decided to maintain its three key interest rates unchanged, signaling that its current monetary policy is considered well-calibrated. President Christine Lagarde expressed confidence, stating the central bank is in a good place and observing signs of economic improvement, while also acknowledging the ongoing uncertainty surrounding inflation. Further reinforcing this sentiment, several ECB Governing Council members on Friday echoed Lagarde’s views, pointing towards a gradually improving economic outlook and emphasizing the lack of immediate pressure to reduce interest rates.
Eurozone Inflation Data
Preliminary data released by Eurostat aligns with this cautious yet positive outlook for the Eurozone. Headline inflation for the region stood at 2.1% year-on-year in October, a slight decrease from 2.2% in September. Core inflation remained stable at 2.4%, marginally exceeding expectations. On a monthly basis, consumer prices increased by 0.2%, further supporting the view that inflation is consistently moving towards the ECB’s 2% target.
Pressure on the British Pound
In contrast, the British Pound remains under pressure following a revised forecast from the Office for Budget Responsibility (OBR). The OBR has lowered its productivity growth projections by 0.3% for the next five years, a development that could widen the UK’s fiscal deficit by approximately £20 billion. This downgraded outlook negatively impacts the UK’s fiscal standing and has fueled speculation that the Bank of England (BoE) might be compelled to implement another interest rate cut before the end of the year.
Future Outlook for EUR/GBP
Looking ahead, the EUR/GBP pair is expected to remain supported by the prevailing policy divergence between a confident ECB and a more cautious BoE. Should these market dynamics persist, the currency pair has the potential to continue consolidating above the 0.8800 level.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.28% | 0.18% | -0.11% | 0.17% | 0.06% | 0.24% | 0.15% | |
| EUR | -0.28% | -0.11% | -0.41% | -0.11% | -0.22% | -0.05% | -0.13% | |
| GBP | -0.18% | 0.11% | -0.30% | 0.00% | -0.11% | 0.06% | -0.04% | |
| JPY | 0.11% | 0.41% | 0.30% | 0.28% | 0.17% | 0.34% | 0.25% | |
| CAD | -0.17% | 0.11% | -0.00% | -0.28% | -0.13% | 0.07% | -0.03% | |
| AUD | -0.06% | 0.22% | 0.11% | -0.17% | 0.13% | 0.17% | 0.09% | |
| NZD | -0.24% | 0.05% | -0.06% | -0.34% | -0.07% | -0.17% | -0.10% | |
| CHF | -0.15% | 0.13% | 0.04% | -0.25% | 0.03% | -0.09% | 0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Expert Summary
The EUR/GBP pair is largely influenced by diverging monetary policy stances and economic outlooks. While the ECB’s confident stance and moderating inflation in the Eurozone support the Euro, concerns over the UK’s fiscal health and productivity place downward pressure on the Pound. This divergence suggests a period of consolidation may be ahead for the currency pair.