The Euro to Pound (EUR/GBP) exchange rate was trending in a slightly stronger position as the European session progressed on Thursday in spite of a mixed bag of PMI’s for the Eurozone and its largest economies.
Yesterday the EUR/GBP pairing plummeted in response to a surprisingly hawkish set of minutes from the Bank of England (BoE) and less-than-spectacular construction output figures from the 18-nation currency bloc.
Today the Pound moderated its gains amid patchy UK retail sales figures. Although retail sales less autos were shown to have increased by more-than-anticipated on a month-on-month basis, sales including autos climbed by just 0.1% rather than the 0.4% gain forecast.
On an annual basis retail sales also failed to climb by as much as hoped, with sales excluding autos rallying by 3.4% year-on-year, down from June’s negatively revised 3.8% gain.
The Euro to Pound exchange rate advanced by over 0.15% after the data was published.
Earlier in local trading the Euro fluctuated modestly in response to reports detailing a slowing in manufacturing and services activity in the Eurozone.
The Eurozone’s Services PMI for August fell from 54.2 to 52.8 instead of moderating to 53.7 as anticipated.
The Euro to Pound Sterling (EUR/GBP) exchange rate hit a high of 0.8008.
Similarly, the manufacturing PMI edged from 51.8 to 50.8. A reading of 51.3 had been projected.
The composite PMI measure plummeted from 53.8 to 52.8, a much steeper drop than the -0.4 revision anticipated.
French manufacturing PMI also defied expectations, sliding further below the 50 mark separating growth from contraction rather than holding steady as economists had hoped.
It wasn’t all bad news for the Eurozone however as the German Manufacturing and Services gauges declined by less than feared. It had been expected that the indexes would dip to 51.5 and 55.5 respectively, but they actually came in at 52.0 and 56.4.
Senior Markit economist Rob Dobson had this to say of the figures; ‘The Eurozone economy continued to make steady progress in August, as the region looks to bounce back following the recent weaker-than-expected GDP readings for the currency union. However, with the PMI Output Index slipping slightly to 52.8, the region remains on course to register growth of only around 0.3% – 0.4% in the third quarter, a level that is unlikely to stimulate any real turnaround in the labour market.’
EUR/USD Exchange Rate Trending around 11-month Low after FOMC Minutes
In the immediate aftermath of the publication of minutes from the latest Federal Open Market Committee meeting the Euro slumped to an almost 11-month low against the US Dollar.
The minutes increased expectations that the FOMC will increase interest rates in early 2015 by outlining progress in the US labour market and acceleration in inflation.
The Euro to US Dollar exchange rate hit a low of 1.3239.
However, while the minutes caused an immediate upswing in the US Dollar, not all industry experts are confident that the Federal Reserve will bring forward its timeline for increasing interest rates. Market analyst Omer Esiner commented; ‘It’s too early to suggest rates may rise sooner than expected. But the consensus view of the Fed is shifting to the centre, part of the process of the Fed normalising its stance, which is fundamentally positive for the Dollar.’
EUR/GBP, EUR/USD Exchange Rate Forecast
While the Euro to Pound exchange rate is likely to continue trending in its present range, the Euro to US Dollar pairing could experience additional fluctuations in the hours ahead.
US reports to be particularly aware of include Initial Jobless Claims, Continuing Claims, Manufacturing PMI and Existing Home Sales.
The manufacturing report is particularly notable. If the measure advances, rather than declining by the 0.5 points anticipated, the US Dollar could rally against the common currency.
The Euro to GBP exchange rate is currently trending in the region of 0.7999.
The GBP to Euro exchange rate is currently trending in the region of 1.2497.
EUR/GBP Exchange Rate Strengthens, EUR/USD Trends Higher
Despite a relatively dismal set of domestic data releases yesterday; the Euro has made slight gains versus the Pound and the US Dollar.
The Euro experienced a schizophrenic set of domestic data yesterday; German data produced positive results, but Eurozone data produced negative results.
The Euro made slight gains against the Pound yesterday as the disappointing UK retail sales growth outweighed the set of declining Eurozone composite, manufacturing and services PMI’s. Eurozone consumer confidence also produced a result well below expectations. The Euro was saved by a good set of German data, and the Pound suffered from the mounting issues in the Eurozone given the strong trading relationship between the UK and the Eurozone.
The US Dollar has been bullish across the board and continued to surge following yet more impressive domestic data results. However, the Euro to US Dollar exchange rate has made slight gains since yesterday. This could be a result of traders pulling away from the ‘Greenback’ (USD) ahead of tonight’s Jackson Hole symposium amidst fear that Federal Reserve Chair Janet Yellen will give a dovish speech and avoid monetary policy completely.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7999,
Euro,,US Dollar,1.3264,
Euro,,Canadian Dollar,1.4561,
Euro,,Australian Dollar,1.4297,
Euro,,New Zealand Dollar,1.5829,
US Dollar,,Euro ,0.7538,
Pound Sterling,,Euro,1.2493,
Canadian Dollar,,Euro,0.6863,
Australian Dollar,,Euro,0.6989,
New Zealand Dollar,,Euro,0.6313,
[/table]
Comments are closed.