Pound Sterling to Euro (GBP/EUR) Exchange Rate Trends around 1.28
On Monday the Pound Sterling to Euro (GBP/EUR) exchange rate managed to push above 1.28 during the European session.
The Euro began the week on the back foot as recent disappointing inflation and retail sales reports for the Eurozone and its largest economy led investors to bet that the European Central Bank will introduce additional stimulus.
The situation worsened on Monday as Markit Manufacturing PMI’s for Italy, Germany and the currency bloc as a whole were negatively revised.
As local trading continued the Pound surged across the board in response to an unexpectedly strong manufacturing report for the UK.
Although the nation’s Markit PMI had been expected to fall to 51.4 in October from 51.5 in September, it actually pushed further into expansion territory and rose to a three-month high of 53.2.
The report saw economist Rob Wood note; ‘The risk to the UK from the Eurozone is not the direct impact of weak exports, which Britain could easily ride out, but rather the potential for uncertainty to infect UK domestic demand as companies perhaps put off investments. The manufacturing PMI jump this month suggests those risks are not yet materialising.’
In the hours ahead several factors could cause movement in the Pound Sterling to Euro exchange rate.
Investors will be focusing on the Eurozone’s Producer Price Index and the UK’s Construction PMI.
The measure of the construction sector is expected to have eased from 64.2 to 63.5, but another upward surprise would be Pound supportive.
The GBP/EUR exchange rate hit a high of 1.2818 on Monday.
UPDATE
Pound Sterling (GBP) Exchange Rate Pressured by Softening in UK Construction Sector
During the European session the Pound Sterling to Euro (GBP/EUR) exchange rate pared initial gains as the UK’s Markit Construction PMI disappointed.
While the measure of construction sector output remained well above the 50 mark separating growth from contraction, it eased from 64.2 to 61.4 in October – defying expectations for a reading of 63.5.
In a statement issued with the figures Markit economist Tim Moore noted; October’s survey provides the first indication that the chill winds blowing across the UK housing
market have started to weigh on the booming residential building sector. House building activity still increased at a strong pace overall, but the sharp growth slowdown since this summer reflects greater caution towards new development projects amid tighter mortgage lending conditions and renewed uncertainties about the demand outlook.’
After the report was published the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2788. The pairing could experience further movement after the Eurozone’s Producer Price Index is released.
UPDATE
Eurozone Growth Forecasts Cut, UK Forecasts Raised
The GBP/EUR exchange rate may have been a bit shaken by the steeper-than-expected decline in the UK Construction PMI, but the pairing continued trending on the cusp of 1.28 after the European Commission published its growth forecasts for both the Eurozone and UK.
The Pound was supported as the projection for UK growth in 2014 was increased from 2.7% to 3.1%. The Commission also envisages expansion of 2.7% in 2015 rather than the 2.5% initially forecast.
It wasn’t such a positive story for the Eurozone however as the currency bloc’s growth outlook for this year was slashed to 0.8% from 1.2%. Expansion of just 1.1% is now expected in 2015 rather than the 1.7% calculated in May.
Euro losses were limited as the Eurozone’s Producer Price Index unexpectedly increased by 0.2% rather than stagnating as forecast.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2785
UPDATE
ECB Officials Oppose QE, Euro Boosted
The Pound Sterling to Euro (GBP/EUR) exchange rate softened before the close of European trading on Tuesday.
Demand for the Euro was supported by a report indicating that 10 influential European Central Bank policymakers are against the idea of rolling out full scale quantitative easing measures.
It was also intimated that some officials are unhappy with President Mario Draghi’s management of the central bank.
With a run of reports due out for the Eurozone and the UK set to release its Services/Composite PMI’s, additional GBP/EUR movement can be expected.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7824,
Euro,,US Dollar,1.2509,
Euro,,Canadian Dollar,1.4252,
Euro,,Australian Dollar,1.4520,
Euro,,New Zealand Dollar,1.6143,
US Dollar,,Euro ,0.7996,
Pound Sterling,,Euro,1.2777,
Canadian Dollar,,Euro,0.7014,
Australian Dollar,,Euro,0.6883,
New Zealand Dollar,,Euro,0.6193,
[/table]
