After taking bottom spot on our one-day currency performance table on Wednesday, the EUR fell further on Thursday against the GBP and USD but rose against the three ‘Commonwealth Currencies’; the Australian, New Zealand and Canadian Dollars. Yesterday morning in London, EUR/USD stood around 1.2380 but by the New York afternoon it was struggling to hold on to a 1.23 ‘big figure’. Overnight in Asia, the pair dipped briefly on to 1.22 but has subsequently recovered to the low 1.23’s.
S France’s central bank revised up its 2018 growth forecast from 1.7% to 1.9% after data showed the economy grew 2.0% in 2017; its fastest growth in six years. Its updated economic outlook said that confidence indicators have held up better so far this year than it expected, joining the IMF, OECD and European Commission in raising their forecasts since the start of the year. Next year, the central bank sees growth easing to 1.7%, down from 1.8% previously, as exports are expected to offer less of a tailwind next year due to a lagged impact from the euro’s strength. It left its 2020 growth forecast unchanged at 1.6%. The economy is forecast to create 185,000-200,000 net new jobs annually through the end of the decade, cutting the unemployment rate to 7.9 percent by the end of 2020. That would be the lowest jobless rate since the end of 2008 and would also put President Emmanuel Macron within reach of a promise to cut it to 7 percent by the end of his term in 2022.
Of course, what still matters most for ECB monetary policy is the outlook for prices. The Banque de France forecasts that inflation will average 1.6% this year, then ease to 1.4% in 2019 before picking back up to 1.8% in 2020. Final February CPI figures for the Eurozone are released later this morning. The EUR opens in London at USD1.2320 with GBP/EUR in the low-1.13’s.