Euro Exchange Rate: Could the Euro Rebound on Next Week’s Data Releases?

GBP EUR Drops After GDP Misses BoE’s 5% Target

The Euro has fared badly over the past week, with economic releases from both Germany and the Eurozone as a whole demonstrating an economic decline. Germany showed the slowest rate of growth since 2013, whilst the Eurozone’s GDP figure slumped. With a new trading week up ahead, euro investors will be hoping that the currency can find a rallying point to lift it out of the depths and back into winning form. However, the coronavirus continues to remain a threat to the Eurozone, particularly the manufacturing sector in Germany as China remains the main importer of German-made cars in the world.

Euro Sets up for New Week on the Back Foot Following Poor Week of Data

The euro started the week on a relatively high point following the release of their manufacturing and services PMIs which both showed an uptick in returns. Manufacturing rose 0.1% and services climbed up 0.3%. Following these data releases, The ECB’s President Christine Lagarde gave a speech which spoke about the rebound of the Euro and optimism moving forward. This gave the euro some momentum as the market was reassured by the central bank’s comments. However, this optimism was short-lived, with the Eurozone’s industrial production figures dropping from -1.7% to -4.1% year-on-year. This poor result came the day after the ECB President’s speech which saw the sentiment around the euro turn sour.

Unfortunately for the euro the disappointment did not stop there. Friday saw the release of the German and Eurozone’s GDP values for Q4 in 2019. Both figures showed the slowest rate of growth since 2013. Germany only showed a 0.6% growth for the year in 2019 following the soft finish in the final quarter. Whilst the Eurozone’s GDP declined from the previous year’s Q4 growth of 1.2% to 0.9%. Both figures suggest the Eurozone is facing an economic slowdown, which contradicts the optimism displayed by the ECB in their Tuesday speech. As a result, the euro has fell out of favour with investors and currently struggles as rival currencies like GBP edge over it.

Euro Looks Towards Next Weeks Data Releases for an Uplift in Optimism

The euro will be hoping that next weeks set of data releases can provide some relief for the struggling currency. On the German front, the economic data will not hold weight until later in the week when the producer price index for January and the Gfk consumer confidence survey is released. Positive upticks in these figures could restore some confidence back into the euro. Friday will see the release of Germany’s flash Markit manufacturing and services PMIs for February, after a poor performance in January’s figures, the Eurozone will hope that the German sectors can recoup losses, though the economic threat of the coronavirus could dampen the spirits on the day.

Meanwhile, for the Eurozone, Thursday will see the ECB’s release of their monetary policy meeting accounts which will contain an overview of the financial market, and economic and monetary developments. Optimism will be hoped for by investors as the euro needs a boost of momentum. Following this, Friday will see the release of the Eurozone’s Markit manufacturing and services PMIs alongside January’s consumer price indices. Any positive returns on these data releases will help offer the euro some support in the market.

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