While the Pound broadly strengthened during European trading as the UK services sector enjoyed its most significant surge in growth for 16 years, the Euro was struggling as Eurozone producer prices climbed by 0.1 per cent in September, less than the 0.2 per cent gain expected.
The common currency also posted broad-based declines as a result of the European Union revising its growth and unemployment forecasts for the Eurozone.
The Pound to Euro Exchange Rate is currently trading in the region of 1.1887 as of 11:25 GMT
While the European Commission still expects the Eurozone’s economy to contract by 0.4 per cent in 2013, as previously projected, growth for 2014 has been cut from the Spring estimate of 1.2 per cent to 1.1 per cent.
Olli Rehn, head of the European Commission, commented: ‘There are increasing signs that the European economy has reached a turning point. But it is too early to declare victory: unemployment remains at unacceptably high levels. That’s why we must continue working to modernise the European economy.’
The EU now believes that unemployment in the Eurozone will hold at 12.2 per cent next year rather than the 12.1 per cent previously forecast.
Spain and France were among the Eurozone nations which saw their growth forecasts downwardly adjusted.
Spain can now look forward to growth of 0.5 per cent rather than the previously predicted 0.9 per cent, while the French economy will expand by 0.9 per cent instead of the 1.1 per cent forecast earlier in the year.
The GBP/EUR Exchange Rate hit a high of 1.1917
Meanwhile, Eurozone sovereign debt isn’t expected to experience much movement, although the EC does see it reaching a record high of 95.9 per cent in 2014 before easing to 95.4 per cent in 2015.
The Euro was softer against the majority of its most traded peers after the economic outlook was published, but the common currency was also feeling the pressure as investors looked ahead to European Central Bank President Mario Draghi’s speech.
With investors expecting Draghi to adopt a fairly dovish stance ahead of this week’s ECB rate decision, the common currency continued to trade lower against the US Dollar and Yen.
According to one Singapore-based currency strategist; ‘Most people are focussing on the ECB meeting, given the weakness in recent data coming out from Europe, particularly the low inflation print. The market is ascribing a chance of a potential rate cut from the ECB, so that’s seen the Euro come off.’
However, while the Euro is likely to continue trading lower against the Pound ahead of tomorrow’s UK manufacturing/industrial data and Eurozone retail sales figures, the common currency could recover losses against the US Dollar if today’s US ISM non-manufacturing gauge slips from 54.4 to 54.0 as expected.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3492 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8410 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4218 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6284 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7412 >
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1887 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7026 <
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6146 >
(Correct as of 11:25 GMT)
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