Categories: Forex News
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2023-08-30 1:40 PM

EUR/GBP Awaits German CPI: South Africa Eyes European Moves

  • The EUR/GBP cross has been navigating within a tight range during early European trade, with keen anticipation centered on the release of the preliminary German Consumer Price Index (CPI) for August.
  • Economic indicators from the Eurozone, including the German Gfk Consumer Confidence Survey and a decline in the Eurozone's money supply, suggest the European Central Bank (ECB) might keep interest rates unchanged in their upcoming meeting. Meanwhile, there's a division among ECB policymakers on future monetary strategies.
  • On the UK front, data showed a decline in the British Retail Consortium for August. With a high probability of a rate hike by the Bank of England (BoE) in September, the Pound Sterling might experience limited downside, potentially influencing the EUR/GBP's trajectory. South Africa, with its close economic ties to Europe, is closely monitoring these developments.
By Nonhlanhla

The economic dance between the Euro and the British Pound, encapsulated by the EUR/GBP cross, remains a pivotal point of interest, especially for nations with financial ties to Europe, like South Africa. In recent developments, the EUR/GBP has been hovering within the tight confines of 0.8597-0.8607 during the early trading hours of the European session on Wednesday, with eyes set on the forthcoming preliminary German Consumer Price Index (CPI) for August. At the moment, the cross settles close to 0.8604, showing no substantial change from the day’s onset.

A Dive into the Economic Forecasts

Eurozone’s Economic Scene: Disappointing economic data emerging from the Eurozone has sparked conversations regarding the European Central Bank’s (ECB) next move. There’s growing anticipation that the ECB might consider keeping interest rates unchanged at its forthcoming September 14 meeting, especially in light of the recent data. Adding fuel to this speculation was September’s German Gfk Consumer Confidence Survey, which reflected a dip to -25.5 compared to its previous reading of -24.6. This score was less optimistic than the projected -24.3. Further compounding the Eurozone’s economic concerns, its money supply experienced a decline for the first time since 2010, attributed to a slowdown in private sector lending and a decrease in deposits.

Differing Views within the ECB: The path forward for the ECB isn’t universally agreed upon, with policymakers divided on whether to maintain the current interest rates or introduce further tightening measures. Critical data points to look out for in the near future include the Eurozone inflation figures and the ECB’s latest economic projections, as these could hold clues regarding the region’s future monetary policy, potentially influencing the EUR/GBP’s trajectory.

Pound Sterling’s Outlook: Meanwhile, the Pound has its set of influences. Recent data reveals a decline in the British Retail Consortium for August, sliding to 6.9% YoY from July’s 7.6%. With the World Interest Rates Probabilities (WIRP) tool indicating a 75% probability of a 25 basis point (bps) rate hike by the Bank of England (BoE) in September, the Pound could see limited downside, presenting a challenge for EUR/GBP growth.

What Lies Ahead?

Financial analysts and traders, especially those in regions like South Africa that closely monitor European economic affairs, will be keenly awaiting the release of the German CPI for August. Projections place the annual and monthly CPI figures at 6% and 0.3%, respectively. Other major announcements to track this week include the Eurozone CPI, Retail Sales data, and the comprehensive ECB Meeting Minutes. These releases are likely to provide traders with valuable insights and potential opportunities concerning the EUR/GBP movement.

For South Africa, with its intricate trade and financial connections to Europe, understanding these currency dynamics and the underlying economic influences is crucial. As these stories unfold, South African businesses, investors, and policymakers will be poised to react, ensuring the nation’s economic interests are safeguarded.

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Nonhlanhla P Dube is a senior news reporter. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her on: Email: