The Pound to Euro (GBP/EUR) exchange rate strengthened earlier on Wednesday after data showed that the earnings of UK workers rose more than inflation in September, taking some of the shine off the wage data however was a separate report, which showed that the unemployment rate failed to decline.
Sterling made gains against the Euro to push back above the 1.28 level as data released by the London based Office for National Statistics (ONS) showed that earning excluding bonuses increased by 1.3% in the year to September.
The figure meant that wage growth outpaced the 1.2% Consumer Price Indexes inflation rate. The measure of average earnings outpaced inflation for the first time in five years spurring a rise in the Pound.
The number of people out of work dropped by 115,000 between July and September, to bring the total number of unemployed down to 1.96 million. The drop marked an 18th consecutive quarterly fall.
The number of people claiming unemployment benefit in the month of October fell by 20,400, a bit less than economist forecasts, compared with a revised figure of 18,400 in September.
All focus will now turn to the upcoming Bank of England (BoE) Inflation report due later in the session. The BoE is expected to cut its growth forecasts.
‘While we are expecting a more dovish inflation report, the market has already adjusted and is not expecting the first increase until the second half of next year. That may help dampen a negative impact on the Pound. Any downward revisions in growth forecasts won’t change the market view that the UK economy is still growing at a solid pace this year,’ said a foreign exchange specialist.
The Euro meanwhile weakened early in the session after data out of Germany showed that the Eurozones largest economy saw a sharp decline in its Wholesale Price Index. The index declined by -0.6% in October, worse than the 0.2% rise forecast by economists.
Pound Sterling to Euro Exchange Rate Softens on BoE Report
The Pound gave up earlier gains against the Euro after the Bank of England cut its growth forecasts and announced that it expects inflation to fall to just 1% over the coming months. The BoE highlighted weakness in the Eurozone as a major drag on the UK economy.
‘The central path is a little weaker than in August, reflecting the weaker global outlook and a softer profile for private sector domestic demand. The main downside risk stems from weaker euro-area activity, which would weigh on U.K. exports,’ said the BoE. Governor Mark Carney also said he did not expect inflation to reach the targeted rate of 2% for three years.The Pound dropped against most of its major peers as the report also suggested that interest rates will not rise until late next year.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Falls Beyond a 1-Week Low
The Pound to Euro (GBP/EUR) exchange rate declined to a one-and-a-half week low on Wednesday afternoon and looks likely to continue to soften. Sterling also fell heavily against the US Dollar, Australian Dollar, New Zealand Dollar and other major peers.
‘Market participants were halfway expecting a firmer commitment from the Bank of England in regard to the timing of the next interest rate rise, but the English central bank is playing it safe, as inflation is still low and there are a number of risks going forward. In light of these developments, the Pound is expected to weaken against the Dollar and a number of other currencies in the short term,’ said Nicholas Ebisch, currency analyst.
The Pound is likely to remain under pressure throughout the rest of the session and perhaps the rest of the week due to a lack of economic data releases out of the UK.
As the session progressed the GBP/EUR exchange rate continued to decline and slid to the 1.26 region.
The Pound Sterling to Euro Exchange Rate Remains at 1-Year Low
Th eEuro continued to edge higher against the battered Pound on Thursday as inflation data out of Germany, France and Spain eased some of the fears over deflation in the Eurozone.
GBP/EUR Exchange Rate Forecast to Make a Weekly Loss
The Pound is on track to make a weekly decline against the Euro.
The Euro strengthened strongly against the Pound and could push back above the 80 level if today’s Eurozone data comes in positively.
The single currency edged higher after data released early in the session showed that Germany’s GDP rose by 0.1% in the last quarter and the French economy grew by 0.3%, exceeding forecasts.
The improved data eased some fears over a Eurozone recession.
The Pound is set to end the week down against the majority of its major peers after falling steeply on Thursday. The Bank of England Inflation Report given on Wednesday sparked the selloff as policy makers warned that UK inflation could fall below 1% over the coming months. Yesterdays house price growth data then added to the selloff as it came in below expectations and caused investors to further pare their bets for an interest rate hike occurring anytime soon. With little in the way of domestic data releases, the Pound is likely to fall further.
GBP/EUR Exchange Rate Stable at 1.25 Level
The Pound was holding steady at the 1.25 level against the Euro as economists were unimpressed with the sessions Eurozone GDP and Inflation reports. Growth across the 18 member Eurozone was just 0.2% and was not enough to put economists at ease over the weakness of the currency bloc. Such weak growth will not be able to create jobs and bring the region’s stubbornly high unemployment down. The Pound meanwhile was further weighed upon by weaker than forecast construction output data.
