As the European session got underway the Pound was holding onto recent gains against the Euro as investors weighed the odds of the European Central Bank hinting at a further rate cut in the wake of last week’s disappointing Eurozone data.
The Pound to Euro Exchange Rate is currently trading in the region of 1.1817 as of 10:35 GMT
Sterling was little-changed against the US Dollar having softened against its North American peer in the aftermath of Friday’s positive US manufacturing report.
However, as trade progressed the Pound advanced on the Euro as UK construction PMI defied expectations by increasing in October.
While economists had envisaged the gauge of construction slipping from 58.9 to 58.7 last month it actually jumped to 59.4 in the steepest rise in construction output for more than six years.
Senior Markit Economist Tim Moore issued this statement with the figures; ‘UK construction output continues to rise like a phoenix from the ashes, with housing, commercial and civil engineering activity all seeing strong rates of expansion at the start of the fourth quarter. […] Importantly, the latest Construction PMI survey signals that job hiring and input buying are now rising in tandem with greater business inflows.’
Given that last week’s UK manufacturing PMI was slightly disappointing, this upbeat report is a welcome sign that Britain’s economic recovery continued in the fourth quarter.
As currency strategist Gavin Friend observed; ‘The data is suggesting that the economy is about as good as it can get. The UK is looking better than Europe and the US. There’s not much further it can go. We should see a renewed downward focus on the Euro against Sterling because people are starting to think about the growth divergence.’
The GBP/EUR Exchange Rate hit a high of 1.1878
But whilst this report boosted the Pound against the Euro, gains were limited as the Euro was lent support by upbeat German manufacturing PMI and a surprising surge in Eurozone Sentix investor confidence.
The EUR/GBP pairing did come under some pressure however as Italian and French manufacturing PMI failed to meet expectations. The contraction in France’s manufacturing sector worsened in October, with PMI falling from 49.4 to 49.1.
The disappointing result for the Eurozone’s second largest economy earned this response from Markit economist Jack Kennedy; ‘The French manufacturing sector remained in contraction at the start of the fourth quarter, with output, new orders and employment all showing further (albeit modest) declines. […] Overall though, the data point to the sector continuing to struggle in the face of persistently weak economic conditions.’
Sterling received further support from the Confederation of British Industry’s decision to increase its UK growth forecast, with the business lobby predicting economic expansion of 1.4 per cent this year as appose to the 1.2 per cent previously estimated. Growth for 2014 was also upwardly revised to 2.4 per cent from 2.3 per cent.
Tomorrow GBP/EUR movement could be triggered by the UK’s services PMI and the European Commission’s publication of economic growth forecasts.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3499 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8462 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4227 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6294 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7407 <
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1817 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7038 >
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6140 >
(Correct as of 10:35 GMT)
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