- EUR/GBP is getting traction around 0.8500 in the early Wednesday session.
- Retail sales in Germany rose 2.2% yoy in March.
- Entrepreneurs expect Boe to cut its rate by a quarter-point at 4.25% at the May policy meeting.
EUR/GBP Cross trading on positive territory near 0.8500 during the early European session on Wednesday. Euro (EUR) remains strong after data on German -economic. Entrepreneurs will change their attention to the Q1 Gross Domestic Product (GDP) estimate from Germany later on Wednesday. Also, the initial rate of growth of the Q1 GDP for the eurozone will be released on the same day.
Data released by Destatis on Wednesday showed that retail sales in Germany declined 0.2% mother in March, compared with 0.8% growth seen in February. This figure came to the better than the estimate of -0.4%. On an annual basis, retail sales rose 2.2% in March compared to 4.3% before (altered from 4.9%). Shared money attracts some consumers to an immediate reaction to the stronger than expected German sale data.
In addition, entrepreneurs raise their bets that the Bank of England (BOE) will reduce interest rates when it announces its next move on May 8, which can drag the GBP lower. Financial groceries have priced at about a 96% possibility that Boe will cut its rate by a quarter-point at 4.25% when it announces its next move on May 8, according to a Reuters poll.
Entrepreneurs will guard the preliminary Eurozone GDP report, which may influence EUR. Eurozone's economy is expected to grow 0.2% QOQ in the first quarter (Q1). If reports show a stronger than expected outcome, it can lift EUR to the near term.
Euro faqs
Euro is the money for 19 European Union countries belonging to the eurozone. This is the second most seriously exchanged money in the world behind the US dollar. In 2022, it costs 31% of all foreign exchange transactions, with an average sun -shift of more than $ 2.2 trillion a day. EUR/USD is the most heavy -exchanged pair of currency in the world, providing approximately 30%off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the Reserve Bank for Eurozone. The ECB sets interest rates and is in charge of financial policy. The main command of the ECB is to maintain price stability, which means control of inflation or stimulation of growth. Its main tool is to increase or decrease interest rates. The relatively high interest rate – or the hope of a higher rate – usually benefits the euro and vice versa. The ECB Governing Council is making financial policy decisions at meetings held eight times a year. The decisions were made by the leaders of Eurozone National Banks and six permanent members, including ECB president Christine Lagarde.
Eurozone inflation data, which is measured by the coexistence index of consumer prices (HICP), is an essential euphoric for the euro. If inflation rises more than expected, especially if above the target of 2% of the ECB, it forces the ECB to raise interest rates to restore it under control. The relatively high interest rate compared to its counterparts can usually benefit the euro, as it makes the region more attractive as a place for global investors to park their money.
Data has released economic health and may affect the euro. Indicators such as GDP, manufacturing and service PMIS, work, and consumer sentiment surveys can influence the direction of single money. A strong economy is good for the euro. Not only does it attract more foreign investments but it can encourage the ECB to put interest rates, which directly strengthens the euro. Otherwise, if economic data is weak, the euro is likely to fall. Economic data for the four largest economies in the Euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the eurozone economy.
Another significant release of data for the euro is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports at a given period. If a country produces highly sought exports then its money gets value from excessive demand created from foreign buyers who seek to buy these goods. Therefore, a positive balance on the net trade strengthens a money and vice versa for a negative balance.
