GBP/EUR: Will Eurozone Inflation Pull Euro Lower?

The euro came under pressure versus the US dollar in the previous session. The euro US dollar exchange rate slipped through US$1.1150 on the open on Wednesday and trended lower across the session.

The euro edged higher in the previous session, supported by stronger than forecast IFO business sentiment data. German IFO index suggests that the worst could be over for Europe’s largest economy. The IFO leading indicator increased for the fourth month in a row to 96.3 in December. This suggests that the slump in the German economy could be bottoming out.

Eurozone inflation data had a muted reaction as it printed in line with analysts’ forecasts at 1% year on year in November, up from 0.7% the previous month. On a monthly basis inflation declined a gloomy -0.3% in November, as it did in October.

There is little in the way of high impacting economic data for the eurozone today. Investors will look ahead to consumer confidence figures on Friday. A solid reading could boost the euro, calming fears over the health of the bloc’s economy.

Dollar Looks To Data

The US dollar advanced in the previous session as investors cheered a week of stronger than forecast data. On Tuesday housing data impressed investors, as did manufacturing and industrial production numbers. Data showed that US manufacturing output increased 1.1% month on month in November, a significant improvement on the -0.7% decline in October. The data suggests that the slump in the US manufacturing sector is easing and the sector is rebounding.

There was no high impacting US data on Wednesday. With a lull in US — China trade headlines, investors will remain focused on the US economic calendar. Today sees the release of the US jobless claims and existing homes sales.

The House of Representatives voted on Wednesday to impeach President Donald Trump. The dollar is not expected to react to the fallout from Trump’s impeachment trial. Given that the chances of Trump being ousted are extremely small, the dollar is not reacting to the Trump story.

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 EUR = 1.12829 USD

Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro.

Or, if you were looking at it the other way around:

1 USD = 0.88789 EUR

In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.