Euro to Pound (EUR/GBP) Exchange Rate Comes off 16-Month Low, EUR/USD Recovers Losses
While the Euro hit multi-month lows against almost several of its most traded currency counterparts on Thursday as investors digested the European Central Bank’s rate decision, the asset showed unexpected resilience and pared losses before the close of local trading.
If you're looking to make an international money transfer, we recommend TorFX.
The common currency trimmed declines against both the British Pound and US Dollar as investors snapped up the currency following the ECB announcement.
Although the ECB outlined unprecedented stimulus measures (such as the introduction of a negative deposit rate) the Euro failed to slide by as much as some economists had expected.
The ECB introduced a new batch of stimulus measures to reduce the threat of deflation in the currency bloc, but weakening the Euro was no doubt a secondary motivation.
The Euro has been enjoying a bullish relationship with several of its rivals for much of 2014, a fact which has piled pressure on the region’s exporters.
However, if the ECB had hoped to drive the Euro to fresh lows yesterday it was unsuccessful.
In the view of fixed-income strategist Guy LeBas; ‘The magnitude and multi-faceted nature of the stimulus suggests that the ECB’s main goal here is to take a chainsaw to the Euro, but the markets are just laughing at Draghi’s slasher mask’.
That being said, the Euro remains 0.20 per cent softer against the Pound and is 0.15 per cent weaker against the US Dollar.
The Euro did receive some support today from the news that German exports climbed by more than anticipated.
On a seasonally adjusted basis, German exports increased by 3.0 per cent month-on-month rather than the 1.3 per cent expected.
However, German imports were up just 0.1 per cent on the month, versus expectations for a 0.8 per cent increase, and the level of industrial production in the region climbed by 0.2 per cent in April – half the 0.4 per cent climb projected and following a negatively revised decline of 0.6 per cent the previous month.
UK trade data had little impact on the EUR/GBP pairing despite the report showing that the UK’s trade deficit widened by more than forecast in April.
Before the weekend further EUR/USD volatility could be triggered by a surprising US non-farm payrolls report.
While today’s data is expected to show that the US economy added 215,000 positions in May, this week’s ADP employment change report fell short of forecasts and the NFP figure could follow suit.
If that indeed occurs the Euro could recover losses against the US Dollar before the close of European trading.
Currently the Euro is trading against the British Pound in the region of 0.8105 and is trading against the US Dollar in the region of 1.3631.