This follows the publication of the flash yearly headline Eurozone Consumer Price Index (CPI) figures for June, which held at 1.2 percent. Core inflation improved on the forecast 1.0 percent, coming in at 1.1 percent. Although rising inflation might prevent the European Central Bank (ECB) from introducing a rate cut in the near future, the recent decline in the French and German sentiment gauges has left many single currency traders remaining cautious. Bert Colijn, the Senior Eurozone Economist at the financial services company ING remained downbeat in his forecast, saying: “With about a month to go before the July ECB meeting, evidence of a weak growth environment keeps mounting.
“This adds to the bleak outlook for price growth in the coming months and without significant improvements in data in the coming month, the ECB stands ready to act.”
Sterling, meanwhile, remained unmoved following the UK growth figures for the first quarter, which held at 0.5 percent.
Rob Ken-Smith at the Office for National Statistics said: “GDP grew solidly and was unrevised in the first quarter of 2019, with manufacturing seeing strong growth due to orders being brought forward ahead of the UK’s original EU departure date.”
Boris Johnson, the Tory leadership favourite for the next British Prime Minister, however, has left some Sterling traders feeling jittery, however.
Mr Johnson has continued to refuse to rule out forcing through a no-deal Brexit, saying that to do so would be an “absolute folly”.
Focus will remain on the G20 summit today.
This will prove influential on the currency market as more risk-correlated currencies will benefit from any indications that US and China could strike a tentative trade agreement.
Expectations are running high following US Treasury Secretary Steve Mnuchin’s comments this week that both superpowers were “90 [percent] of the way” to a trade deal.
President Donald Trump has said that he expected “very big” trade deals, however President Xi Jinping called US protectionism “bullying practices” yesterday.
The pound euro exchange rate will remain driven by political factors as we head into the weekend.