The Euro to Pound Sterling (EUR/GBP) exchange rate rallied after European Central Bank President Mario Draghi said that the bank will refrain from introducing a quantitative easing programme until the next quarter.
The Euro to Pound Sterling (EUR/GBP) exchange rate is forecast to continue to soften as economist attention turns to Thursday’s European Central Bank (ECB) policy meeting. Expectations are growing that policy makers will soon introduce more stimulus measures in order to encourage growth in the Eurozone.
The Euro to Pound Sterling (EUR/GBP) exchange rate weakened by more than 1% later on Wednesday as traders raised their bets that the European Central Bank will announce new easing measures at tomorrows policy meeting. Stronger than forecast UK data also supported Sterling.
As the session progressed, the Euro to Pound (EUR/GBP) exchange rate remains under pressure as weak Eurozone data continued to weigh and as economists raised their bets that the ECB will have to introduce new measures to aid the regional economy.
Earlier on Wednesday the Euro to Pound (EUR/GBP) exchange rate weakened and is forecast to slide to its lowest level in 3-weeks as data out of the Eurozone raised fears over the health of the region’s economy and as UK data came in better than expected.
Eurozone services PMI data for November was released and it did not paint a pretty picture. Business across the single currency bloc said that economic growth is now at a 16-month low as both the services and composite PMI reports came in at 51.1, both were below economist forecasts.
Business activity in France contracted at its fastest pace in 9-months as activity in the nation’s manufacturing and services sectors. The Markit compiled composite PMI weakened to 47.9 in November, a drop from 48.2 and below the 50 mark, which divides expansion from contraction.
Germany’s private sector meanwhile saw activity decline to its slowest pace in 17 months. Markit’s final composite PMI, which covers the manufacturing and service sectors, dropped to 51.7 from 53.9 in October. The services index alone fell to 52.1, a 16-month low.
‘The latest PMI data show a deepening downturn in the French service sector during November. With manufacturing also continuing to struggle, the private sector looks set to act as a drag on GDP during the fourth quarter,’ said Markit economist Jack Kennedy.
The Pound found support as a report showed that activity in the UK’s dominant services sector expanded faster than forecast last month. The Markit services PMI increased to a reading of 58.6 in November, countering the sharp decline of 56.2 in October and beat economist forecasts.
‘Faster growth of services activity brings welcome news that fears of a potentially sharp slowdown in the economy look overplayed. There are also signs that wage growth is picking up alongside the improving labour market, which should help boost household incomes and consumer spending,’ said Chris Williamson, chief economist at Markit.
The Euro to Pound Sterling (EUR/GBP) Exchange Rate
The Euro to Pound Sterling Exchange Rate was trading in the region of 0.7913
The Euro to Pound Sterling Exchange Rate Weakened to a session low of 0.7920
The Euro to Pound Sterling Exchange Rate Hit a Session High of 0.7837
