Euro Leans on the German Economy to Recoup Gains in 2020

GBPEUR Looking to Test Monthly Highs

As the new year approaches, analysts have begun to give their forecasts for 2020. For the Euro, an emphasis is being placed on the German economy. This makes sense as the German economy is the largest in the Eurozone. Markets are hoping that recent forecasts for the German inflation figures to rise in the new year will come through and help bolster the Euro against its rivals.

Euro Exchanges Rates Look Towards German Retail Sales Figures Growth

The Euro investors are hoping that the currency can pick up as we head into the new years week. Analysts are predicting a rise in German retail sales data, which if true could boost the EUR. Despite the sharp -1.9% decline in October’s monthly sales, investors are remaining hopeful that the November figures will turn out encouraging figures.

Investors will be hoping to see a solid uptick in consumer spending, something which is likely to boost economic confidence going forward should that be the case. EUR traders will be looking to benefit from a rise in German consumer confidence as it could diminish the odds of a potential slow Q4 period. However, if the sales figures do not deliver and instead highlight a monthly contraction, then the Euro is likely to fall out of favour with investors.

Euro Boosted by Rising German Inflation Forecasts

The Euro is finding further support from Germany as some economists are predicting a rising inflation for the German economy. Friday will see the release of December’s German consumer price index report. Forecasters are suggesting a solid uptick in price pressures for both the month and year, this lends the Euro a solid rallying point against its major rivals. However, analysts have stated that an improvement in the headline inflation rate will not be enough to action the ECB into raising interest rates, it will offer support to the EUR exchange rates. On the other hand, if inflationary pressures fall short of the forecasts, the mood towards the Euro is likely to turn sour.

Attention will be focused on Friday’s release of economic data for Germany. With Germany being the largest economy in the Eurozone, the success of the Euro largely depends upon the success of Germany. Should data be in favour of the German economy the Euro will find support and rally. If the converse is true, then the Euro will likely struggle towards the end of the week and stand it in bad stead for the following week.

If you would like to learn more about factors influencing GBP/EUR exchange rates for an upcoming currency transfer, feel free to contact myself, Jonathan Watson, using the form below.