As the week comes to a close the Euro is preparing to post a five-day decline against several of its major peers.
The Euro extended declines against the US Dollar and reversed gains against the Pound as data showed that Eurozone construction output declined for a third consecutive month.
In November total construction dropped by 0.6 per cent, month-on-month, following a revised decline of 1.1 per cent in October.
On the year, output was down by 1.7 per cent.
The data detailed an increase in construction in Spain and France, but a fall in construction in Italy and Germany, the Eurozone’s largest economy.
This result is indicative of the ongoing weaknesses in areas of the currency bloc and reminds investors that the Eurozone’s return to growth is still tentative.
However, while the construction data is a concern, the industrial sector performed strongly and is likely to have helped the Eurozone’s expansion at the close of last year.
The EUR/GBP pairing was already on the back foot as stronger-than-anticipated UK retail sales growth helped the Pound surge against its peers and jump by 0.7 per cent against the Euro.
Similarly, the EUR/USD pairing was close to a six-week low as yesterday’s positive US initial jobless claims figures and restrained inflation data lent the ‘Greenback’ support.
The US Dollar’s bullish attitude inspired this comment from currency strategist Simon Derrick; ‘The guidance from Fed speakers this week has been steady as she goes with regard to tapering and I think that seems to be the key Dollar theme that they’re going to continue to reduce these purchases. There’s an awful lot of stuff elsewhere in the world that undermines the story for other currencies.’
Euro to Pound Forecast
We forecast that if today’s run of US data, including building permits, housing starts and industrial/manufacturing production reports show improvement, and add to the cast for the Fed trimming asset purchases by more than 5 billion Dollars, the EUR/USD pairing could sink even lower before the weekend.
The EUR/GBP pairing is ending the week on a low, but investors will be looking ahead to next week’s UK employment data and Eurozone/German economic sentiment reports for further direction.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8275,
Euro,,US Dollar,1.3600 ,
Euro,,Canadian Dollar,1.4878,
Euro,,Australian Dollar,1.5441 ,
Euro,,New Zealand Dollar,1.6410 ,
US Dollar,,Euro ,0.7356 ,
Pound Sterling,,Euro,1.2089,
Canadian Dollar,,Euro,0.6721 ,
Australian Dollar,,Euro,0.6469 ,
New Zealand Dollar,,Euro,0.6082 ,
[/table]
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