GBP to EUR Exchange Rate Pares Gains despite Poor German Manufacturing
A combination of some positive German data and a hawkish speech given by European Central Bank President Mario Draghi saw the Euro strengthen against many of its major competitors initially. However, poor Eurozone data publications and a disappointing German manufacturing print have seen the Euro fade against many of its rivals, including the Pound. Meanwhile, Sterling has struggled against a wave of trader profit buying post Scottish independence referendum.
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The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2729.
With an absence of British economic data on Monday the Pound struggled against a spate of profit buying after the initial surge following the Unionist victory in the Scottish referendum. The news that Britain would remain whole and united sent Sterling rocketing up against all sixteen of its most traded currency peers. The boost opened up some attractive selling positions and the Pound lost all of those initial gains and then some.
Monday’s European data left a lot to be desired. The yearly Italian non-seasonally adjusted Industrial Sales contracted by -0.7%, a large decline considering the previous figure of 1.3% growth. Eurozone Consumer Confidence was also very disappointing having fallen to -11.4 from -10.0 despite a forecast declination to -10.5.
The Pound Sterling to Euro exchange rate has hit a low today of 1.2672.
Tuesday’s British data hasn’t done anything to help the Pound regain some of its losses. The Loans for House Purchase report was expected to increase from 42715 to 42913, but the actual data showed a fall to 41588. Public Finances may have improved upon the previous figure of -7.2 billion, having printed at 1.6 billion, but was unable to meet with the market consensus of 6.0 billion. Public Sector Net Borrowing, Public Sector Net Borrowing ex Interventions and Public Sector Net Borrowing Central Government all declined from the previous figures and all fell below forecast.
European data has been mixed, in terms of results, on Tuesday but generally negative. The German Services PMI increased from 54.9 to 55.4, the Composite PMI also advanced from 53.7 to 54.0. However, the German Manufacturing PMI failed to meet with the forecast figure of 51.2 with the actual data declining from 51.4 to 50.3. Chris Williamson, Chief Economist at Markit said; ‘There are also worrying signs that growth could slow further in the fourth quarter. Inflows of new orders in the manufacturing sector are declining again, dropping for the first time in 15 months, and business expectations about the year ahead turned down in the services sector, led down by a slump in confidence in Germany’.
The Euro did experience a surge against many of its rivals in the early part of the London session in response to a hawkish speech given by ECB President Mario Draghi. Draghi intimated that he is willing to do whatever it takes to fix the Eurozone economy stating; ‘we stand ready to adjust our policy stance further’.
The Pound Sterling to Euro exchange rate has reached a high today of 1.2749.
On Wednesday the Pound eased lower against the Euro in spite of some more disappointing data for the Eurozone’s largest economy.
Yesterday’s German manufacturing PMI was a slight disappointment and today’s IFO gauges of Business Climate, Expectations and Current Assessment all registered declines, with the first two sliding by more than expected.
However, yesterday’s public finance figures and readjusted trader positions ensured that the GBP/EUR exchange rate faltered early in the European session. UK data is lacking today so there may be little in the way of further Pound to Euro movement.