Euro to US Dollar (EUR/USD) Exchange Rate Advances to 1.1390
Before the close of the European session the Euro to US Dollar (EUR/USD) exchange rate rallied by over 1.0% in response to concerning US Durable Goods Orders data.
As goods orders had been expected to increase by 0.3% in December following a decline in November, the -3.4% slump was a big shock and put the US Dollar under immediate pressure.
November’s figure was also negatively revised to -2.1%.
This data could cause the Federal Reserve to reconsider increasing interest rates in the first half of 2016, and with the FOMC announcement looming, we’ll soon find out if that’s the case.
Although other US reports, including the nation’s Markit Services PMI and Consumer Confidence data printed well above expected levels, this orders print was particularly bleak and the US Dollar fell against most of its currency counterparts after its publication.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Surges 0.7%
The Euro to Pound Sterling (EUR/GBP) exchange rate extended earlier gains following the release of the UK’s growth data.
The nation’s economy was shown to have expanded by 0.5% on a quarter-on-quarter basis in the fourth quarter. Growth of 0.6% had been expected.
This disappointing result took the annual growth figure to 2.7% rather than the 2.8% anticipated.
According to the BBC’s economics editor Robert Preston; ‘How significant is the slowdown in the British economy, given that the dominant service sector is still booming, but construction is shrinking and manufacturing almost back to flatlining? The deceleration is not surprising, in view of the flatlining of the UK’s main trading partner, the Eurozone. And two of the negative influences, a fall in energy supply of 2.8% and in construction of 1.8%, are in industries that tend to be volatile.’
He added; ‘That said, it does give pause for thought that growth is now apparently being driven to a large extent by retail and consumer spending. We were supposed to be rebalancing, towards manufacturing and investment. And although there has been a bit of that over the past couple of years, it appears to be petering out.’
The UK’s BBA Loans for House Purchase figure also fell short, falling from a revised 36657 to 35667 in December rather than coming in at 36500.
After the figures were published the EUR/GBP currency pair achieved a high of 0.7512
The Euro to Pound Sterling (EUR/GBP) exchange rate recouped some of its Greek-election inspired losses on Monday as investors dismissed ‘Grexit’ concerns.
Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate also advanced amid a lack of US data and bets that the common currency’s recent decline had been overdone.
Euro to Pound Sterling (EUR/GBP), Euro to US Dollar (EUR/USD) Exchange Rates Trend Higher
Both the EUR/GBP and EUR/USD pairings advanced by over 0.2% as the European session got underway on Tuesday.
The common currency initially softened on Monday in response to the news that anti-austerity party Syriza won the Greek election.
However, the fact that Syriza had to form a coalition seriously depleted ‘Grexit’ concerns and the Euro recouped much of its initial declines.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.7432
Euro strength was also derived from some better-than-expected reports for Germany.
Both the nation’s IFO Business Climate/Conditions indexes showed notable improvement.
According to one London-based strategist; ‘The market is treating Syriza’s win as an anti-austerity movement more than an anti-Euro movement. The bigger picture is QE instead of Greece.’
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7480
The Euro remained trading in a slightly stronger position against the Pound even as a prominent Bank of England (BoE) official insinuated that interest rates could be increased sooner-than-projected.
EUR/GBP, EUR/USD Exchange Rate Forecast
As the European session continues, the Euro to Pound Sterling (EUR/GBP) exchange rate could experience volatility as a result of the UK’s fourth quarter growth figures.
Economists have forecast that the UK economy expanded by 0.6% on a quarter-on-quarter basis in Q4, down from growth of 0.7% in Q3.
If growth is shown to have slowed by more than this, it would undermine demand for the Pound and the EUR/GBP pairing could advance.
The UK’s BBA Loans for House Purchase figure will also be of interest.
Movement in the Euro to US Dollar (EUR/USD) exchange rate is also likely to occur following the publication of US Durable Goods Orders figures.
It is expected that orders rebounded in December following a negatively revised decline of -0.9% in November.
Anything below a 0.3% gain would be Dollar-negative, while anything above would support the US currency.
Investors will also be taking a keen interest in the US Consumer Confidence Index (which is projected to show improvement) and the Markit Services/Composite PMI.
Data for the Eurozone is lacking until tomorrow.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7476
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3374
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1287
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8858