The Euro has been boosted against the Pound today, having been pushed up by 0.5% thanks to surprising growth in the Greek economy.
Final Greek GDP in Q1 had been forecast to remain negative on the quarter and year, but ended up posting 0.4% growth in both fields. This has raised optimism about Greece’s road out of debt, and additionally, the figure put Greek economic growth above the UK’s over the same period.
Although the UK construction PMI showed growth instead of the forecast contraction, this was not enough to trigger a GBP EUR rally.
The Euro to Pound exchange rate has climbed to 0.8750, while the Pound to Euro exchange rate has dropped to 1.1429.
(First published 09:26, June 2nd, 2017)
The Euro has made minor gains on the Pound today, following a better-than-expected result for the Spanish unemployment change.
- EUR GBP rate rises to 0.8717 – GBP EUR trades down at 1.1472
- Euro bolstered by Spanish jobs data – Spanish unemployment remains at record high
- Pound weakened by Conservative immigration targets – Uncertainty about exact plans to cut net immigration
- Euro shift possible on incoming Greek GDP – UK construction PMI due shortly
Euro demand has risen this morning, thanks to a forecast-beating dip in Spanish unemployment.
The number of unemployed persons in May has fallen by -111.9k, a slight improvement on the forecast -110.2k figure.
This news comes in the context of the overall Eurozone, however; Spanish unemployment is the second highest in the currency bloc, and still remains over 18%.
The Pound has dipped by -0.2% against the US Dollar today, following confusion over the Conservative immigration target.
The Conservative manifesto detailed untimed plans to get net immigration down to the ‘tens of thousands per year’, but more recently the PM has stated that this target would ideally be hit by around 2022.
Since then, Brexit Secretary David Davis has called this an ambition, but not a promise, which has lowered confidence in the consistency of the Conservative Party message.
The last major Eurozone data of the week will be incoming Greek GDP growth rate figures. These finalised results are expected to show an improvement in Q1, from -1.1% to -0.5% on the year and from -1.2% to -0.1% on the quarter.
While such results would be positive, they would still indicate that national GDP was contracting, which leaves the Greek economy in an unstable position.
If GDP growth actually falls further into a negative range then the Euro could be weakened, as it would show a lack of progress on efforts to rebuild the Greek economy.
The Pound could turn highly volatile in the near-term, when the UK construction PMI for May is announced. This measure of sector activity is expected to show a slight decline, from 53.1 to 52.7.
Such a result would still show growth in the sector, but it would be ever closer to the sub-50 point contraction range. The UK has been struggling with a severe housing shortage for a long time, so less construction could imply less houses being constructed.
If the construction PMI does fall and traders reach this conclusion, then the Pound could sink further against the Euro.
Current Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8717 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1470.