EUR/GBP recovers to near 0.8530 on hopes of potential US-Eurozone trade deal
- EUR/GBP moves higher to near 0.8530 as investors turn confident that the US and the Eurozone will reach a trade deal soon.
- Flash Spain and France inflation data for June showed that price pressures grew at a faster-than-expected pace.
- BoE’s Bailey has shown concerns over UK’s labor market outlook.
The EUR/GBP pair claws back its early losses and moves higher to near 0.8530 during European trading hours on Friday. The pair gains as the Euro (EUR) outperforms its peers as investors become hopeful that the United States (US) and the Eurozone will reach a trade deal before the July 9 deadline for 90-day pause on reciprocal tariffs.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.01% | 0.13% | 0.08% | 0.19% | 0.03% | -0.20% | |
| EUR | 0.16% | 0.09% | 0.27% | 0.22% | 0.32% | 0.05% | -0.09% | |
| GBP | 0.00% | -0.09% | 0.20% | 0.09% | 0.22% | -0.00% | -0.10% | |
| JPY | -0.13% | -0.27% | -0.20% | -0.06% | 0.04% | -0.28% | -0.27% | |
| CAD | -0.08% | -0.22% | -0.09% | 0.06% | 0.14% | -0.17% | -0.24% | |
| AUD | -0.19% | -0.32% | -0.22% | -0.04% | -0.14% | -0.27% | -0.33% | |
| NZD | -0.03% | -0.05% | 0.00% | 0.28% | 0.17% | 0.27% | -0.07% | |
| CHF | 0.20% | 0.09% | 0.10% | 0.27% | 0.24% | 0.33% | 0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
A report from the Wall Street Journal (WSJ) showed on Thursday European Union (EU) officials are aiming to reach a trade agreement swifty. The report also showed that leaders are considering concessions on imports from the US to avert additional tariffs.
European Commission President Ursula von der Leyen confirmed that the US shared a new negotiating document and said the bloc was “ready for a deal”. However, she clarified that the EU would defend its interests if talks failed.
On the domestic front, investors await the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for June, which will be released on Tuesday. The inflation data will influence market expectations for the European Central Bank’s (ECB) monetary policy outlook.
Meanwhile, flash France Consumer Price Index (EU norm) and Spain HICP data for June have shown that price pressures grew at a faster-than-expected pace.
In the United Kingdom (UK), growing labor market concerns due to the increase in employers’ contribution to social security schemes could dampen the Pound Sterling’s (GBP) strength. The British currency has performed strongly this week as the Bank of England (BoE) has remained committed to gradual downward monetary path.
BoE Governor Andrew Bailey guided that the central bank will remain gradual on further interest rate cuts and cited upside inflation risks and easing labor market strength in a conference at British Chamber of Commerce (BCC) on Thursday.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 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 the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen 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’s economy.
Another significant data release 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 over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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