In the aftermath of the Federal Reserve’s policy announcement the Euro softened against the US Dollar. The common currency was still on the back foot as the European session began and went on to slide against the Pound as German retail sales and consumer confidence reports failed to meet expectations while UK house prices climbed.
The Pound to Euro Exchange Rate is currently trading in the region of 1.1723 as of 11:05 GMT
Euro losses were later exacerbated by the news that the unemployment rate in Italy hit a new record high while inflation in the Eurozone slipped even further below the European Central Bank’s 2 per cent target.
According to data compiled by the European Union’s statistics office, the annual rate of inflation plummeted to 0.7 per cent in October, close to a four year low. Economists had expected the inflation rate to hold at 1.1 per cent.
The core inflation rate also declined, slipping from 1 per cent to 0.8 per cent despite forecasts that it would remain unchanged.
After the data was published economist Martin van Vliet commented; ‘With energy price base effects becoming less favourable in the coming months and some indirect tax increases in the pipeline early next year, the falling streak in inflation is probably nearly over. However, Eurozone headline inflation is still set to remain well below the ECB’s target in the foreseeable future.’
Separate figures showed that the unemployment rate in the Eurozone held at a record high of 12.2 per cent in September. Economists had hoped the jobless rate would fall to 12.0 per cent.
Italian and Greek unemployment hit fresh record highs in September, although Greek retail sales slumped by less than expected in August.
The GBP/EUR Exchange Rate hit a high of 1.1743
While these reports piled pressure on the EUR/GBP pairing, the EUR/USD pairing was also struggling ahead of the release of US initial jobless claims data. Economists are forecasting that jobless claims dipped in the week ending October 25th.
If accurate the data would support the Fed’s assertion that US growth persists in spite of the government shutdown.
As noted by currency strategist Daragh Maher; ‘The FOMC statement has challenged the market belief that the Fed would wait until 2014 before tapering. This is bad for the risk-on mood that had been prevailing’.
While additional Euro fluctuations could occur in the hours ahead as a result of US news, movement in the GBP/EUR pairing may be a little limited ahead of tomorrow’s UK manufacturing PMI.
If the manufacturing gauge shows that growth in the sector slowed in October, as economists expect, the Pound could give up today’s gains against the Euro.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3666 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8527 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4466 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6496 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7312 >
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1723 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6941 >
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6029 >
(Correct as of 11:05 GMT)
Comments are closed.