Euro hits fresh 16-month lows against a firmer British Pound 

  • EUR/GBP dips to fresh lows at 0.8442, and posts a 1.9% decline in less than three weeks.
  • ECB's Lagarde discarded any intervention to support France amid the growing fiscal pressures.
  • Societe Generale's experts see chances of a further decline below 0.8400.

The Euro (EUR) resumes its downtrend against the British Pound (GBP) as high Oil prices are hitting the common currency harder than the GBP, while concerns about France’s public debt keep investors on their toes. The EUR/GBP pair has reached a fresh 16-month low at 0.8442 and shows a 1.92% decline in less than three weeks.

The Euro drew some support on Tuesday from the European Central Bank (ECB) President, Christine Lagarde, who urged the French government to consolidate its fiscal policy and discarded the possibility of purchasing French bonds to ease borrowing costs. 

Lagarde also said that the 1% Gross Domestic Product (GDP) growth forecast for the Eurozone released by the International Monetary Fund (IMF) is “not a bad outcome”, and pledged to be attentive to second-round effects on inflation, keeping the door open for further monetary tightening in the near-term.

High Oil prices increase the risk for Eurozone economies

Oil prices, however, remain steady at high levels amid reports of fresh attacks on Saudi Arabia by the Iran-backed Houthi militias and the new Iranian tactics to target vessels attempting to cross the Strait of Hormuz. Brent Oil prices remain above $104, levels boosting the risks of pushing Eurozone economies into a stagflation period of low economic growth and high consumer prices.

The Pound, on the other hand, has remained resilient to the energy shock so far. Strong UK data and hawkish comments by Bank of England (BoE) policymakers have boosted expectations that the bank might hike rates at November's meeting. Against this background, UK monthly GDP figures and Industrial production data, due on Thursday, will be carefully analysed to confirm those views.

Analysts at Societe Generale note that EUR/GBP has dipped below the July lows, a move that underscores the “prevalence of downward momentum.” Looking ahead, Societe Generale warns that “failure to reclaim last week's high at 0.8500 could result in a continuation of the decline,” with “the next projections…located at 0.8405 and 0.8370/0.8355.”



India WPI Inflation climbed from previous 9.92% to 11.39% in September

了解更多 Previous

US Dollar: Fed inflation focus into October FOMC – Danske Bank

Danske Bank strategists highlight September Consumer Price Index (CPI as this week's key US release, with headline and core inflation expected to edge higher year-on-year despite moderating monthly readings.
了解更多 Next