The Pound Sterling (GBP) to Euro (EUR) exchange rate declined to its lowest level in two-weeks on Thursday as UK data disappointed and unemployment in the Eurozone fell to its lowest rate since March 2012.
Sterling came under pressure early in the session after a report released by Gfk NOP after midnight showed that British consumer confidence dropped for the first time in six months in July.
The confidence index fell to -2 from the 1 recorded in June. Economists had been expecting a rise to 2.
‘All five of the component parts of the index fell this month, with four-point drops in both the questions about the country’s general economic situation being particularly noticeable. The almost relentless rise of the last six months couldn’t continue indefinitely, and the government will be hoping this is just a temporary setback rather than the forerunner of a wider decline in confidence,” said Nick Moon, managing director of social research at GfK.
Also putting pressure upon the Pound was the latest UK house price inflation data released by Nationwide.
The report showed that house price inflation eased on a yearly basis.
Nationwide’s July index rose to 0.1% on a monthly basis and was up by 10.6% year on year.
The figure was below June’s reading of 11.8%. The data adds to signs that the UK housing market is beginning to cool down.
The Euro meanwhile found support from improved unemployment data but further gains were muted by a weaker-than-expected inflation report.
The jobless rate in Germany declined for the first time in three months suggesting that the Eurozone’s largest economy is starting to improve following the slowdown seen in the second quarter of the year.
Unemployment in the wider 18 member Eurozone also recorded a fall.
The overall unemployment rate across the euro area fell to 11.5% in June from 11.6% last month. That’s the lowest rate recorded since September 2012.
The lowest unemployment rates were recorded in Austria (5.0%), Germany (5.1%) and Malta (5.6%), and the highest in Greece (27.3% in April 2014) and Spain (24.5%).
Further gains for the Euro were restrained as a separate report showed that inflation in the Eurozone fell yet again in July.
The inflation rate declined to a five-year low of 0.4% and raised fears that the region is sliding closer into deflation territory.
The data will be of concern to the European Central Bank and raises pressure for it to introduce more measures in order to tackle low inflation.
‘Reinforcing the worrying news for the ECB, Spain has moved back into deflation with consumer prices falling 0.3% year-on-year in July. Furthermore, Italy was on the brink of deflation as consumer prices were only flat year-on-year in July,’ said Howard Archer from IHS Global Insight.
Sterling could regain some ground on Friday if the latest Markit/CIPS Manufacturing PMI data comes in strongly.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6875 ,
Pound Sterling,,Euro,1.2601 ,
Pound Sterling,,Australian Dollar,1.8162 ,
Pound Sterling,,New Zealand Dollar,1.9874 ,
US Dollar,,Pound Sterling,0.5926 ,
Euro,, Pound Sterling ,0.7935 ,
Australian Dollar,, Pound Sterling ,0.5507 ,
New Zealand Dollar,,Pound Sterling,0.5025 ,
[/table]
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