Euro to British Pound (EUR/GBP) Exchange Rate Flops to 22-Month Low
The Euro has crashed to a 22-month low against the Pound, with the EUR/GBP exchange rate currently trading at 0.7899, as Sterling soars in light of upbeat inflation and employment data this week.
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Wednesday has seen the EUR/GBP exchange rate fluctuate from highs of 0.7922 to lows of 0.7894; the Euro at present is unable to contend with the bullish Pound as it gains on the back of positive data and anticipation of UK interest rate hikes.
UK and European research expert, Nick Parsons, commented: ‘The UK economy is on every measure outperforming Euroland. The fall in the jobless rate is clearly good news. Slowing wage growth is a temporary statistical phenomenon which will be reversed.’
The Pound has been gaining since Tuesday when UK inflation data showed a growth of 1.9%, and with more positive figures revealed on Wednesday regarding employment, the Pound is dominating the currency market.
The UK saw unemployment levels fall to a five and a half year low of 6.5% on Wednesday, which has fuelled speculation that the Bank of England will raise interest rates sooner rather than later.
Some economists are pushing for interest rate hikes before Christmas claiming that recent figures demonstrate an economy that could sustain the rates.
However Wednesday brought a mixed bag of results for the UK, as Average Weekly Earnings data floundered in May with only a 0.3% increase.
An economist for ONS, Peter Patterson, commented on Wednesday’s upbeat UK data stating: ‘The striking divergence between employment and pay continues. While the employment rate has never been higher, the average weekly earnings of employees excluding bonuses have risen by only 0.7% over the past year.’
Overall the Pound is strong in the currency market, placing itself as serious competition against other majors.
Bloomberg observed: ‘The Pound rose 12% in the past 12 months, the best performer among 10 major currencies tracked by Bloomberg Correlation-Weighted Indexes. The Euro rose 1.1%.’
However the Eurozone’s trade surplus has grown YoY as May’s Trade Balance figures have observed which bodes well for the Eurozone recovery which is highly reliant on exports.
Thursday will be a highly influential day for the Euro as the Eurozone Consumer Price Index is released which is expected to reach 0.8%.
With no other influential UK data releases this week, the Pound will use the strength of Tuesday and Wednesday’s positive data to keep it buoyant in the currency market.
With the Eurozone publishing data throughout the rest of the week, the Euro may gain some strength if figures prove favourable, however in the EUR/GBP exchange rate; the Pound is most likely to dominate for some time being a popular favourite with investors.