{"id":4601,"date":"2018-05-31T00:00:00","date_gmt":"2018-05-31T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100495-gbp-eur-eurozone-inflation-fall\/"},"modified":"2018-05-31T00:00:00","modified_gmt":"2018-05-31T04:00:00","slug":"100495-gbp-eur-eurozone-inflation-fall","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100495-gbp-eur-eurozone-inflation-fall\/","title":{"rendered":"GBP\/EUR: Eurozone Inflation Into Focus As Italy Fears Abate"},"content":{"rendered":"<p>Strong eurozone economic data and signs of progress in Italy\u2019s political turmoil helped lift the euro on Wednesday. As a result, the pound euro exchange rate dropped heavily, giving back the gains from earlier in the week. The exchange rate declined over 100 points, taking the rate to a low of \u20ac1.1392.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<p> 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. <\/p>\n<p> For example, it could be written: <em>1 GBP = 1.13990 EUR<\/em> <\/p>\n<p> <em>Here, \u00a31 is equivalent to approximately \u20ac1.14. This specifically measures the pound\u2019s worth against the euro. If the euro amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n<p> Or, if you were looking at it the other way around: <em>1 EUR = 0.87271 GBP<\/em> <\/p>\n<p> <em>In this example, \u20ac1 is equivalent to approximately \u00a30.87. This measures the euro\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the euro.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>Data coming from the UK continues to be less than encouraging. This week has been particularly quiet as far as UK economic data is concerned. In the previous session investors focused on a decline in shop prices presented in data from the British Retail Consortium (BRC). According to the BRC shop prices fell by 1.1% year on year in May, the largest decline since January 2017. Meanwhile prices of non-food products slid 2.5%. Whilst this is good news for the UK consumer, who will slowly start to feel an easing of pressure on their purses, this is bad news for the prospects of an interest rate rise by the Bank of England (BoE).<\/p>\n<p>Falling shop prices indicates that inflation is declining. The central bank is less likely to hikes interest rates when inflation is falling. As the prospects of a rate hike were pushed yet further into the future, the pound depreciated.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>Demand for the pound could come under more pressure today as investors look towards the release of UK net consumer credit data. An increase in household debt is unlikely to convince the BoE that the economy is ready for another interest rate hike.<\/p>\n<h2><a href=\"#eurozone-inflation-in-focus\" name=\"eurozone-inflation-in-focus\"><\/a>Eurozone Inflation In Focus<\/h2>\n<p>The euro was back in favour on Wednesday, as investors grew optimistic of the two Italian populist parties forming a coalition to prevent a snap election. Italy\u2019s president Sergio Mattarella triggered the sell off in the euro earlier in the week by blocking the appointment of a Eurosceptic finance minister. He also triggered the recovery in the previous session by holding informal talks with both the League and the 5 Star Movement, in an attempt to broker a deal between them to avoid a destabilising national election.<\/p>\n<p>Provided there is less chaos in Italy, euro investors will turn their attention towards Eurozone inflation data. Analysts are expecting inflation to have picked up slightly for the bloc in April. Should this be the case, the euro could continue the rally from the previous session.<\/p>\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Strong eurozone economic data and signs of progress in Italy\u2019s political turmoil helped lift the euro on Wednesday. As a result, the pound euro exchange rate dropped heavily, giving back the gains from earlier in the week. The exchange rate declined over 100 points, taking the rate to a low of \u20ac1.1392. What do these [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4602,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1380,1379],"tags":[1395,1394,1387],"class_list":{"0":"post-4601","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eur","8":"category-gbp","9":"tag-eur","10":"tag-gbp","11":"tag-inflation"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/EUR: Eurozone Inflation Into Focus As Italy Fears Abate - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100495-gbp-eur-eurozone-inflation-fall\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100495-gbp-eur-eurozone-inflation-fall\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100495-gbp-eur-eurozone-inflation-fall\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/EUR: Eurozone Inflation Into Focus As Italy Fears Abate\",\"datePublished\":\"2018-05-31T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100495-gbp-eur-eurozone-inflation-fall\\\/\"},\"wordCount\":759,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100495-gbp-eur-eurozone-inflation-fall\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100495-gbp-eur-eurozone-inflation-fall.jpg\",\"keywords\":[\"eur\",\"gbp\",\"Inflation\"],\"articleSection\":[\"EUR\",\"GBP\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2018\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100495-gbp-eur-eurozone-inflation-fall\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100495-gbp-eur-eurozone-inflation-fall\\\/\",\"name\":\"GBP\\\/EUR: Eurozone Inflation Into Focus As Italy Fears Abate - 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