The Euro to Pound (EUR/GBP) exchange rate declined to its lowest level in 3-weeks as UK data came in positively and as Chancellor George Osborne said that UK growth forecasts had been increased. Against the US Dollar (EUR/USD) the Euro tumbled to a fresh 2-year low.
More bad news for the Eurozone hammered the Euro lower on Wednesday, increasing pressure upon the European Central Bank to introduce new measures in order to encourage growth and tackle the threat of dangerously low inflation.
Data published by research group Markit showed that the Eurozone’s composite purchasing managers index fell to a 16-month low in November and activity in the regions private sector slowed from the preceding months figure.
More worrying for the region was data out of Germany and France, which showed that activity in the top two Eurozone economies, weakened further. France’s composite index slid to 47.9, a 9-month low.
Recession Fears Grow
Germany saw its composite index deteriorate to its worst level in 17-months by coming in at 51.7. Italy saw activity fall to a 4-month low and Spain’s came in at its weakest level in 9 months.
In a PMI, any figure below 50 indicates contraction whilst a figure above indicates expansion.
‘There are worrying signs of economic performance deteriorating in the core countries which, if sustained could drive the region back into recession. France remains the biggest concern, suffering an ongoing decline in business activity, but growth had also slowed to the weakest level for one and a half years in Germany,’ said Markit’s chief economist Chris Williamson.
Euro to Pound Exchange Rate Hit a Session Low of 0.7844
The Pound meanwhile found support from a report, which showed that activity in the UK’s dominant services sector increased more than forecast and as Chancellor George Osborne said that growth forecasts for the nation have been revised higher.
The data highlighted the diverging trends of the UK, which is now the fastest growing G-7 economy, and the Eurozone, which looks set to enter recession next year if things do not improve.
The US Dollar continued its advance against the Euro as the currency found support from speculation that the Federal Reserve is edging closer to raising interest rates, something that is a stark comparison to the policy of the ECB. The
‘Greenback’ shrugged off softer than forecast ADP data as it found support from an ISM non-manufacturing index, which beat expectations.
Market attention will now focus on Thursday’s upcoming ECB policy meeting and economists will be looking for any signs that the central bank could be getting closer to introducing a quantitative easing programme.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.2310 ,
Euro,,British Pound,0.7846 ,
Euro,,Australian Dollar,1.4620 ,
Euro,,Canadian Dollar,1.3983 ,