The Euro to Pound (EUR/GBP) exchange rate was seeing little movement on Wednesday as disappointing data releases from the Eurozone and UK restrained the currency pair’s movements. Against the US Dollar (USD), both currencies weakened sharply.
Sterling declined sharply against several major peers and was sliding towards its lowest level in a year against the US Dollar after data showed that activity in the UK’s dominant service sector fell to a 17-month low in October.
The Markit compiled Purchasing Managers Index (PMI) dropped to 56.2, down from September’s level of 58.7 and was worse than economist forecasts for a dip to 58.5. The disappointing data caused economists to increase their bets that Bank of England policy makers will strengthen their resistance against calls to raise interest rates.
‘The further slip towards the 50 expansion threshold is a potential concern for the UK’s largest sector. While the sector is still reporting growth, many management teams will need to review their growth strategies and not just rely on a potentially busy Christmas period if they are to help the sector back on the right trajectory,’ said Chris Sood-Nicholls, head of global services at Llyods Bank.
There was more bad news for the Eurozone as the bulk of the data released came in below forecasts and further highlighted that the regions is sliding towards a triple dip recession.
Business activity across the 18-member Eurozone increased less than expected in October despite hefty price cutting adding to fears over the regions low inflation rate and overall economic strength. Businesses across the Eurozone have been slashing prices for the past two years and did so at their steepest pace since 2010 last month.
Markit’s final Composite PMI, which measures activity across the currency bloc, inched higher to 52.1 from the previous month’s 10-month low of 52.0.
PMI data out of France and Germany came in below economist expectations meaning that activity slowed in the Eurozone’s top two economies.
Adding to the Eurozone’s woes was the release of retail sales data, which showed that sales were much weaker than expected in September and Augusts figure was revised lower.
According to Eurostat, retail sales declined by 1.3% on a month on month basis and improved by just 0.6% on an annual basis. The August figures were also revised lower from 1.2% to 0.9% on a monthly basis.
Further losses for the Euro are likely as the session progresses as market attention turns to the latest batch of data from the USA.
The Euro to Pound (EUR/GBP) Exchange Rate Falls Further
The Euro continued to decline against the Pound on Wednesday afternoon as strong data out of the USA pulled investors away from the single currency. Attention is now shifting to Thursday’s Bank of England (BoE) and European Central Bank (ECB) policy meetings outcomes.
A run of soft economic data out of the UK is likely to lead to policy makers firming their position on holding interest rates at the record low level of 0.5%. The banks monthly quantitative easing figure is also expected to stay unchanged.
Pressure is building on the ECB to introduce new measures to tackle the threat posed by low inflation and weakening growth.
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,1.2496 ,
Euro,,British Pound,0.7817 ,
Euro,,Australian Dollar,1.4537 ,
Euro,,Canadian Dollar,1.4238 ,