Prior to the Bank of England’s interest rate announcement, the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2723
Pound Sterling to Euro (GBP/EUR) Exchange Rate Riding High after Autumn Statement
Yesterday the Pound Sterling to Euro (GBP/EUR) exchange rate was able to advance beyond a three-week high thanks to a strong services PMI for the UK and a comparatively bullish Autumn Statement from the Chancellor of the Exchequer.
The Pound continued to hold the higher ground against the Euro on Thursday ahead of the influential Bank of England (BoE) and European Central Bank (ECB) policy meetings.
Additional Sterling strength was derived from the Halifax House Price report.
The data showed a 0.4% month-on-month increase in house prices, stronger than the 0.3% growth anticipated, and year-on-year price gains of 8.2%.
Earlier…
As the European session progressed, the Pound Sterling to Euro (GBP/EUR) exchange rate was trading 1.0% higher thanks to upbeat UK data and disappointing Eurozone figures.
GBP/EUR Exchange Rate Bolstered by Eurozone Sales Stats
Demand for the Euro had already been undermined on Wednesday by a mixed bag of manufacturing/services PMI’s for the Eurozone and its largest economies, so the news that retail sales in the currency bloc failed to increase by as much as forecast helped keep the Pound Sterling to Euro (GBP/EUR) exchange rate buoyant.
Retail sales in the 18 nation region rose by 0.4% on the month in October following a positively revised decline of -1.2% in September. An increase of 0.5% had been expected.
This took the annual figure to 1.4%, lower than the 1.6% year-on-year sales growth anticipated.
According to FastFT; ‘Consumer spending is supported by extremely subdued inflation and low interest rates in the Eurozone, but is constrained by high unemployment and retrenching bank lending in most countries.’
However, while the result was a bit disappointing, it did at least show that retail sales returned to growth. The GBP/EUR’s gains were muted as a result, although the Pound did push above 1.27.
As the day progressed and investors began looking ahead to tomorrow’s European Central Bank interest rate decision, the Pound Sterling to Euro exchange rate consolidated and extended its gains, briefly achieving a high of 1.2765.
The Pound’s gains against the Euro saw strategist Peter Frank comment; ‘There’s no doubt that the weakness that we’ve seen in the Eurozone, certainly in the services sector, is different to what is happening in the UK.’
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate moved closer to the 1.27 level following the publication of an unexpectedly strong services report for the UK.
GBP/EUR Exchange Rate Hits 1.2693
While investors were exerting some caution ahead of the release of the Eurozone’s retail sales report, the Pound Sterling to Euro exchange rate extended its daily gain to 0.5% as the UK’s services PMI climbed by more than expected.
The measure of the services sector hit 58.6 in November – bettering forecasts for a reading of 56.2.
The impressive result saw Markit economist Chris Williamson observe; ‘Faster growth of services activity brings welcome news that fears of a potentially sharp slowdown in the economy look overplayed. The upturn in the service sector offset slower growth of factory production and construction activity in November, lifting the overall pace of economic growth from October’s 16-month low.’
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate might have come under a little pressure on Tuesday as the UK’s Construction PMI declined, but the pairing continued trending in the region of 1.2670 as investors bet the UK’s Services gauge would impress.
GBP/EUR Exchange Rate Fluctuates after Eurozone Stats
While the Pound Sterling to Euro (GBP/EUR) exchange rate began the European session strongly, advancing by over 0.4%, the pairing later fluctuated as the Eurozone released final Services PMI data for its largest economies.
Initially the Euro gained as the Services/Composite PMIs for Italy were positively revised, with the composite measure pushing above the all-important 50 boundary.
Advances were then stymied as figures for both Germany and France, the Eurozone’s two largest economies, were negatively adjusted.
The contraction in the French services sector was shown to be more severe than anticipated, while Germany’s Composite PMI was cut from 52.1 to 51.7.
The services measure for the Eurozone as a whole dropped from 51.3 to 51.1 in November.
After these reports were published the Pound Sterling to Euro exchange rate advanced to a high of 1.2685.
UK Services Growth Expected to Increase, Pound (GBP) Could Climb
However, the Pound Sterling to Euro (GBP/EUR) exchange rate could rally in the hours ahead as the UK releases its Markit Services PMI for November.
As the UK’s services sector accounts for over 70% of total growth, the figure is highly influential and a strong indicator of how GDP will print.
Economists have forecast that the Services gauge increased from 56.2 in October to 56.5 in November, well above the 50 mark separating growth from contraction.
This result would help take the composite measure to 56.2 from 55.8.
If the indexes achieve or exceed these estimates the Pound could rally, and the GBP/EUR exchange rate just might have the potential to climb above 1.27.
Eurozone Retail Sales to Influence GBP/EUR Trading
That being said, an upswing in the GBP/EUR pairing could be prevented if the Eurozone’s retail sales report prints positively.
A month-on-month sales increase of 0.5% is expected.
While this would be a positive result, it wouldn’t make up for the -1.3% decline recorded in September.
If the data falls short we could see the Pound Sterling to Euro (GBP/EUR) exchange rate trending in the region of 1.27 later today.
Pound Sterling (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,1.5647,
Pound Sterling,,Euro,1.2677,
Pound Sterling,,Australian Dollar,1.8602,
Pound Sterling,,New Zealand Dollar,2.0126,
US Dollar,,Pound Sterling,0.6388,
Euro,,Pound Sterling,0.7886,
Australian Dollar,,Pound Sterling,0.5375,
New Zealand Dollar,,Pound Sterling,0.4968,
[/table]
