Yesterday an impressive Services PMI for the UK helped the Pound Sterling to Euro (GBP/EUR) exchange rate surge above the 1.27 level.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Bullish, ECB in Focus
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a three-week high as the UK services sector was shown to have expanded by considerably more than anticipated in November.
Further GBP/EUR gains were derived from poor Eurozone data and the Chancellor of the Exchequer’s Autumn Statement.
The Pound Sterling to Euro (GBP/EUR) exchange rate could test fresh highs today if the European Central Bank (ECB) offers some guidance regarding the deployment of full-scale quantitative easing measures.
Earlier…
The expectation that today’s UK Services PMI will show an acceleration in growth in November kept the Pound Sterling to Euro (GBP/EUR) exchange rate trending in a stronger position as the European session began.
GBP/EUR Stronger before UK Services Stats
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2621 on Wednesday. If today’s UK services gauge climbs from 56.2 to 56.5 as expected the Pound could extend gains against its European peer.
That being said, movement in the GBP/EUR pairing will also be dictated by the Eurozone’s retail sales report. The data is expected to show a 0.5% month-on-month increase in sales. Given the recent run of less than spectacular reports for the currency bloc, a sub-par figure wouldn’t be well received.
Earlier…
While the Pound Sterling to Euro (GBP/EUR) exchange rate was holding fairly steady following the release of a disappointing construction report for the UK, the Pound weakened against several of its other most-traded currency counterparts.
GBP/EUR Exchange Rate Trends Higher after PPI
The Pound Sterling to Euro (GBP/EUR) exchange rate was hovering around the day’s opening levels after the UK’s Markit Construction PMI fell short of forecasts.
The gauge had been expected to soften, but the decline from 61.4 in October to 59.4 in November was far steeper than anticipated.
While the Pound did edge lower against peers like the US Dollar after the data was released, losses were limited as investors dwelt on the positive aspects of the report.
In a statement issued with the figures Markit economist Tim Moore observed; ‘Looking ahead, construction firms are optimistic overall about their growth prospects for the next 12 months, reflecting strong confidence that positive spending patterns will continue. However, some construction companies noted that uncertainties ahead of next year’s general election had weighed on business confidence and influenced clients’ willingness to commit to new projects.’
However, the GBP/EUR exchange rate strengthened following the publication of the Eurozone’s Producer Price Index.
The measure of producer price inflation fell by -0.4% on the month in October, a steeper drop than the -0.3% decline anticipated.
Later in the session the GBP/EUR exchange rate eased back to trade just on the 1.26 borderline.
The Pound Sterling to US Dollar (GBP/USD) exchange remained trading in a softer position. In the view of strategist Peter Dragicevich; ‘The major risk and concern is the slowdown in Europe and how much of an impact that has on the UK. It’s still a positive-Dollar story. On the crosses it should hold up.’
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate continued trending above 1.26 on Tuesday ahead of the release of the UK’s Construction PMI.
GBP/EUR Exchange Rate Bolstered by Manufacturing
The GBP/EUR pairing advanced on Monday as the Pound rallied across the board in response to an unexpectedly strong UK Manufacturing PMI.
The four-month high reading prompted this response from David Noble of the Chartered Institute of Procurement and Supply; ‘Manufacturing appears to be a safe pair of hands and moving in a positive trajectory in the UK economy as we await detail of the Chancellor’s statement this week.’
As well as strengthening against the Euro, the Pound gained on the US Dollar, Australian Dollar and Canadian Dollar.
Euro (EUR) Forecast to Struggle before ECB Meeting
The Euro, meanwhile, was feeling the heat following yesterday’s concerning manufacturing reports for the Eurozone and its largest economies.
The news confirms that the currency bloc remains under considerable pressure and is unlikely to start posting notable growth anytime soon.
Later this week the European Central Bank (ECB) will be delivering its latest interest rate decision.
While there are many industry experts calling for further stimulus from the central bank, it is believed that the ECB will opt to leave policy unchanged.
Last week ECB executive Board Member Benoit Coeure asserted; ‘We do see a degree of urgency in acting, which does not apply only to monetary policy. There is urgency in addressing the labour market issues in the Eurozone, in creating jobs. That’s the only way to reconcile the European people with the European project.’
Bundesbank President Jens Weidmann also implied that the ECB’s focus might not be on deploying quantitative easing at the present time.
UK Construction, Eurozone PPI to Impact GBP/EUR Exchange Rate
In the hours ahead the Pound Sterling to Euro (GBP/EUR) exchange rate could fluctuate in response to the UK’s Markit Construction PMI and the Eurozone’s Producer Price Index.
If the UK’s Construction report comes in above forecast levels, as was the case with yesterday’s manufacturing index, the Pound Sterling to Euro (GBP/EUR) exchange rate could push further above the 1.26 level.
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,1.5660,
Pound Sterling,,Euro,1.2637,
Pound Sterling,,Australian Dollar,1.8519,
Pound Sterling,,New Zealand Dollar,2.0022,
US Dollar,,Pound Sterling,0.6356,
Euro,,Pound Sterling,0.7911,
Australian Dollar,,Pound Sterling,0.5404,
New Zealand Dollar,,Pound Sterling,0.5400,
[/table]
