As the European session opened Sterling was finding it hard to shake off yesterday’s declines against the Euro and US Dollar, and the British asset went on to soften further as a report revealed that UK house prices climbed at a slower-than-forecast pace in September.
The Pound Sterling to Euro Exchange Rate was in the region of 1.1919 as of 11:00 GMT.
Halifax figures showed that house prices advanced by 0.3 per cent last month, rather than the 0.5 per cent predicted.
The GBP/EUR pairing came under additional pressure after Eurozone and French services PMI expanded by more than expected, boosting the Euro.
As the day progressed the Pound extended declines in spite of positive UK data.
Although today’s services report confirmed that the sector continued to grow strongly last month, the gauge came in at 60.3, just below the 60.5 forecast.
Before its publication, strategist Jeremy Stretch said of the PMI data; ‘Investors had been buying Sterling as the data proved to be supportive, and the question now is how long can that last? The services data is still at an elevated level so even if we see a slight pullback on a softer number, investors will probably use it as a buying opportunity.’
The data showed that the UK service sector has enjoyed its best quarterly performance since 1997 and seen a rapid increase in new business as well as solid improvement in employment.
1 Euro is currently worth 0.8390 pence
Markit economist Chris Williamson issued the following statement with the figures; ‘Businesses in the vast service sector reported an ongoing growth spurt in September, expanding at a rate just shy of Augusts’ recent high. The buoyant data follow similar upbeat surveys of the manufacturing and construction sectors, and collectively the surveys suggest the economy will have expanded by as much as 1.2 per cent in the third quarter; it’s fastest growth rate since the pre-crisis days of 2007’.
Given that the Bank of England is due to deliver its rate decision and policy statement next week, Williamson’s final remarks are of particular interest; ‘Although third quarter growth of 1.2 per cent still leaves the economy 2.2 per cent smaller than its peak before the crisis, growth is clearly running much faster than the government and Bank of England anticipated earlier in the year. If such strong expansion persists, it’s hard to see how the Bank can avoid a review of its ‘forward guidance’ policy.’
Shortly after the PMI report was published, the Euro’s newfound strength against the Pound was bolstered as Eurozone retail sales unexpectedly surged in August, jumping by 0.7 per cent month-on-month rather than the 0.2 per cent forecast.
Influential UK news is a little lacking tomorrow, and while the domestic Lloyd’s employment confidence index will be worth noting, it will be US developments triggering market volatility before the weekend. If the partial federal shutdown is still in place, the highly anticipated US non-farm payrolls report is unlikely to be published, and speculation surrounding the Federal Reserve tapering quantitative easing will dominate discussion once more.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6228 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1919 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7282 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9532 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6162 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8390 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5783 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5135 >
(As of 11:00 GMT)
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