Earlier this week the Pound declined against its major currency counterparts in response to Markit’s below-forecast Manufacturing PMI, and the British currency faltered again after Services PMI also fell short.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News – Eurozone Retail Sales/Employment Data and Greek Progress Sees Pound Fall to 1.36
A combination of factors drove the Pound Sterling to Euro (GBP/EUR) exchange rate to record a 1% drop on Wednesday.
Demand for the Pound eased early in the European session as a number of UK reports (the British Retail Consortium’s Shop Price Index, the Nationwide House Price figure and the UK’s Services PMI) all showed weakness.
The services index had the most detrimental impact on GBP/EUR trading as the services sector accounts for around three quarters of total UK growth.
Additional GBP/EUR declines were recorded after the Eurozone’s unemployment rate fell by more-than-expected and the level of retail sales growth in the region exceeded forecasts.
As the European session progressed the European Central Bank’s (ECB) interest rate announcement and accompanying press conference cemented the Euro’s dominance over the Pound.
ECB chief Mario Draghi implied that the deflation risks which were facing the Eurozone have now passed, but that the central bank will be continuing with the full course of quantitative easing.
While the latest Greek bailout proposals are still being considered, optimism over that situation lent the common currency support.
We can expect more GBP/EUR exchange rate volatility tomorrow as the Bank of England (BoE) makes its interest rate announcement and the Eurozone releases its Retail PMI.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3624
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News – ‘Cable’ Trends in Narrow Range after Mixed US Data
After the UK’s Services PMI defied forecasts for a reading of 59.2 by printing at 56.5, the Pound Sterling to US Dollar (GBP/USD) exchange rate tumbled to a low of 1.5249.
Even moderately encouraging comments from a Markit official regarding the BoE’s potential timeline for the increasing of interest rates failed to prevent the Pound’s downtrend.
Markit economist Chris Williamson noted; ‘Rate hikes later this year should not be ruled out: there are signs that the disappointing rate of expansion is only temporary, linked to uncertainty surrounding the general election, and the surveys point to rising inflationary pressures as well as a further tightening of the labour market.’
However, during the North American session Sterling was able to recoup much of its earlier slide against the US Dollar and return to trending around the day’s opening levels as the US published a mixed bag of ecostats.
While the US ADP Employment Change number surprised to the upside, printing at 201K instead of the 200K expected, and the US trade deficit narrowed by more-than-anticipated, the two primary measures of the US services sector provided cause for concern.
The final Markit Services PMI was negatively revised from 56.4 to 56.2 while the ISM Non-Manufacturing Composite index dropped from 57.8 to 55.7 in May – a much steeper tumble than predicted.
As the US services sector is such a key contributor to total growth, the report put the ‘Greenback’ under pressure ahead of Friday’s US Non-Farm Payrolls figures.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5326
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