- The EUR/GBP quotes with slight profits around 0.8390 in the first measures of the European session on Wednesday.
- Holzmann of the ECB asks for a pause in feat cuts until September in commercial tensions.
- The operators are BOE dovish bets after the strongest United Kingdom inflation data than expected.
The EUR/GBP crossing quotes with slight profits around 0.8390 during the first bars of the European session on Wednesday. The euro (EUR) is strengthened in front of the sterling pound (GBP) in the middle of the de -escalation of commercial tensions between the European Union (EU) and the United States (USA). Later on Wednesday, operators will focus on the unemployment rate of Germany.
The president of the United States, Donald Trump, stopped his threatened tariffs from 50% to July 9 about US imports of European goods after a weekend call with the president of the European Commission, Ursula von der Leyen. The growing hopes of a possible commercial agreement between the EU and the US could boost the short -term shared currency.
In addition, the policy manager of the European Central Bank (ECB), one of his most Hawkish officials, Robert Holzmann, said the ECB should pause the trimming of interest rates up to at least September in the middle of the commercial war between the EU and the USA. Hawkish comments from Holzmann provide some support for the euro against the pound sterling.
On the other hand, operators feel increasingly sure that the Bank of England (BOE) will delay its relaxation cycle after publication of the strongest growth than expected in the inflation data of the United Kingdom for April. This, in turn, could boost GBP and act as an obstacle to the crossing. The probabilities of a BOE rates cut in August were reduced to 40% by investors, compared to 60% before inflation data. However, the fixation of futures prices of interest rates suggests that investors see about 37 basic points (PB) of BOE rates reductions by the end of 2025.
Euro Faqs
The euro is the currency of the 19 countries of the European Union that belong to the Eurozone. It is the second most negotiated currency in the world, behind the US dollar. In 2022, it represented 31 % of all foreign exchange transactions, with an average daily business volume of more than 2.2 billion dollars a day. The EUR/USD is the most negotiated currency pair in the world, with an estimate of 30 %of all transactions, followed by the EUR/JPY (4 %), the EUR/GBP (3 %) and the EUR/AU (2 %).
The European Central Bank (ECB), based in Frankfurt (Germany), is the Eurozone reserve bank. The ECB establishes interest rates and manages monetary policy. The main mandate of the ECB is to maintain price stability, which means controlling inflation or stimulating growth. Its main tool is the rise or decrease in interest rates. Relatively high interest rates (or the expectation of higher types) usually benefit the euro and vice versa. The GOVERNMENT BOOK of the ECB makes decisions about monetary policy in meetings that are held eight times a year. The decisions are made by the directors of the National Banks of the Eurozone and six permanent members, including the president of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the harmonized consumer prices index (IPCA), are an important economic indicator for the euro. If inflation increases more than expected, especially if it exceeds 2% of the ECB, it forces the ECB to rise interest rates to control it again. Relatively high interest rates compared to their counterparts usually benefit the euro, since they make the region more attractive as a place for global investors to deposit their money.
Published data measure the health of the economy and can have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer trust surveys can influence the direction of the single currency. A strong economy is good for the euro. Not only attracts more foreign investment, but it can encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the euro is likely to fall. The economic data of the four largest economies in the euro zone (Germany, France, Italy and Spain) are especially significant, since they represent 75% of the economy of the euro area.
Another important fact that is published on the euro is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will gain value simply by the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
