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6 Jan 2014
EUR/GBP sheds gains as German CPI does little to boost ECB optimism
FXstreet.com (London) - EUR/GBP has declined from its session highs following German inflation numbers. The pair is currently trading at GBP0.8296.
German inflation meets consensus
Headline German consumer price index inflation rose 1.4 percent year-on-year in December, from 1.3 percent in November. German prices rose 0.4 percent month-on-month.
Harmonised European inflation numbers (HICP) for Germany decreased to 1.2 percent from 1.6 percent in November. German HICP dropped by 05 percent month-on month.
The breakdown of the headline figure shows that the biggest inflationary pressures came from higher prices for food, alcohol and tobacco and household energy.
Freezing Eurozone growth
The low levels of German inflation will do little to ease European policymakers’ concerns about the problems facing the Eurozone. Figures released on Friday showed that the contraction in private loans within the Eurozone continues to gather pace, declining a further 2.3 percent in November, year-on-year. The freezing up of European credit comes despite moves by the European Central Bank to slash its main refinancing rate to 0.25 percent in an attempt to encourage lending.
With historically strong euro has held down inflation and combined with a growth-killing private loan drought, the Eurozone’s fragile recovery remains at risk.
Modest Eurozone growth despite fragility
The euro had rallied earlier today, boosted by purchasing managers’ index numbers. The Eurozone composite posted a three-month high of 52.1 in December, up from 51.7 in November, and its second highest level in two-and-a-half years. The Markit report showed that manufacturing continued to lead the recovery. Growth of production accelerated to its fastest since May 2011, as new orders improved aided by a solid increase in new export business.
As may continue to be a running theme for 2014, carrying through from 2013, France and Italy were the rotten apples in the basket. French services again contracted, printing at 47.8, down from November’s 48.0. Italy posted 47.9, beating the November print of 47.2, but still indicating contraction.
Indication of potential upside wage pressure
The numbers also gave positive news for UK wages, which have continued to slump in real terms, despite a strongly improving UK macro picture. There was further evidence of capacity pressures in December, with backlogs of work rising for a ninth successive month. Many companies responded to rising workloads by adding to their payroll numbers at a marked pace. Employment rose for a twelfth successive month.
EUR/GBP sheds gains
EUR/GBP rallied sharply on the release of the Eurozone composite and regional PMI numbers, hitting a session high of GBP0.8331. However, the euro’s gains have been short lived, retracing back to GBP0.8296, shedding much of its gains from a session open of GBP0.82840.
German inflation meets consensus
Headline German consumer price index inflation rose 1.4 percent year-on-year in December, from 1.3 percent in November. German prices rose 0.4 percent month-on-month.
Harmonised European inflation numbers (HICP) for Germany decreased to 1.2 percent from 1.6 percent in November. German HICP dropped by 05 percent month-on month.
The breakdown of the headline figure shows that the biggest inflationary pressures came from higher prices for food, alcohol and tobacco and household energy.
Freezing Eurozone growth
The low levels of German inflation will do little to ease European policymakers’ concerns about the problems facing the Eurozone. Figures released on Friday showed that the contraction in private loans within the Eurozone continues to gather pace, declining a further 2.3 percent in November, year-on-year. The freezing up of European credit comes despite moves by the European Central Bank to slash its main refinancing rate to 0.25 percent in an attempt to encourage lending.
With historically strong euro has held down inflation and combined with a growth-killing private loan drought, the Eurozone’s fragile recovery remains at risk.
Modest Eurozone growth despite fragility
The euro had rallied earlier today, boosted by purchasing managers’ index numbers. The Eurozone composite posted a three-month high of 52.1 in December, up from 51.7 in November, and its second highest level in two-and-a-half years. The Markit report showed that manufacturing continued to lead the recovery. Growth of production accelerated to its fastest since May 2011, as new orders improved aided by a solid increase in new export business.
As may continue to be a running theme for 2014, carrying through from 2013, France and Italy were the rotten apples in the basket. French services again contracted, printing at 47.8, down from November’s 48.0. Italy posted 47.9, beating the November print of 47.2, but still indicating contraction.
Indication of potential upside wage pressure
The numbers also gave positive news for UK wages, which have continued to slump in real terms, despite a strongly improving UK macro picture. There was further evidence of capacity pressures in December, with backlogs of work rising for a ninth successive month. Many companies responded to rising workloads by adding to their payroll numbers at a marked pace. Employment rose for a twelfth successive month.
EUR/GBP sheds gains
EUR/GBP rallied sharply on the release of the Eurozone composite and regional PMI numbers, hitting a session high of GBP0.8331. However, the euro’s gains have been short lived, retracing back to GBP0.8296, shedding much of its gains from a session open of GBP0.82840.