In what has been a pretty mixed day of data for the Eurozone the Euro continues to trade in the region of a three-month low against the Pound.
As the Pound broadly strengthened in response to surprisingly strong UK services PMI the Euro fluctuated modestly as separate reports showed that while the Eurozone’s economy contracted by less than expected in the second quarter, retail sales in the 17-nation currency bloc dropped by significantly more than anticipated in July.
The Euro to Pound Sterling Exchange Rate is currently trading in the region of 0.8444 as of 11:15 GMT
In accordance with previous estimates, today’s GDP figure proved that the Eurozone returned to growth in the second quarter after a historically long recession. The currency bloc’s economy expanded by 0.3 per cent quarter-on-quarter (as expected) and contracted by 0.5 per cent year-on-year, less than the 0.7 per cent contraction expected.
In response to the data economist Robert Wood noted: ‘We’re at the early stages of an improvement after a prolonged recession that has been very painful, particularly in Euro periphery countries. Growth probably won’t be strong enough until the end of next year to start to make a dent in unemployment.’
Meanwhile, Eurozone retail sales unexpectedly declined by 1.3 per cent in July, year-on-year, rather than falling by the 0.3 per cent predicted.
Month-on-month retail sales increased by 0.1 per cent, less than the 0.2 per cent gain expected. July’s figure was negatively revised to a month-on-month decline of 0.7 per cent.
The EUR/GBP Exchange Rate hit a low of 0.8427
Earlier today reports published by Markit economics showed that the service industry in Germany expanded by more than expected in August while the service industry in the Eurozone grew by less than hoped.
In the report’s accompanying statement Markit economist Chris Williamson asserted: ‘The Eurozone recovery is looking increasingly broad based, with more sectors and more countries emerging from recession. […] Encouragingly, domestic demand is starting to pick up within the Euro area, with the region’s retail PMI also moving into positive territory for the first time in over two years in August.’
However, Williamson went on to add: ‘Although the picture is improving, the survey is still consistent with only very modest economic growth of approximately 0.2 per cent in the third quarter. While policymakers will therefore be pleased to see this growing body of evidence that the euro area recovery is now taking hold, the weakness of growth and ongoing job losses suggest the ECB’s principle focus will be on reassuring markets that rates will not rise in the foreseeable future.’
The European Central Bank will issue its rate decision tomorrow, and if the institution continues with the recent tradition of supplying forward guidance the Euro could experience notable volatility.
The Bank of England’s rate decision, also taking place tomorrow, will exert influence over the EUR/GBP pairing as well.
As the week progresses news from the US will be the main driver of EUR/USD movement. If today’s Fed Beige Book and Friday’s US non-farm payrolls data supports the case for the Federal Reserve tapering stimulus this month, the Euro’s bearish trend with its US peer may well continue into next week.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3176 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8444 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4390 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6733 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7593 <
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1844 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6930 >
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.5929 >
(Correct as of 11:15 GMT)
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