The Euro to Pound Sterling (EUR/GBP) Exchange Rate continued its downward trend on Tuesday as market worries over the implications of further sanctions against Russia weighed upon sentiment towards the single currency. Against the US Dollar (USD) the Euro declined to its lowest level since February 2nd.
Investors are eyeing the heightened tensions between the West and Russia following the shooting down of a Malaysian passenger plane last week.
“This terrible incident happened in the first place because of Russia’s support for the separatists,” U.K. Foreign Secretary Philip Hammond said today in Brussels. “We have to send a clear signal from our meeting today that we recognize that and we are going to go further as a consequence.”
Further sanctions are expected to be announced by the European Union later in the session, a move that has raised concerns over the possible economic impacts upon the Eurozone and wider global economy.
The main drag upon the Euro however was the increasingly divergent monetary policy between the European Central Bank (ECB) and other major Central Banks, in particular the Bank of England and US Federal Reserve.
As the ECB gets closer to introducing new easing measures the US and UK Central Banks appear to be heading in the opposite direction as those respective economies continue to recover.
The Euro was unable to take advantage of softer-than-expected UK data earlier in the session. Data showed that the UK’s public finances posted a larger than forecast deficit in June suggesting that the coalition government is struggling to get the nation’s finances in check.
According to the report the UK borrowed £11.38 billion last month, more than the narrowing of £10.66 billion expected by economists.
A separate report also showed that the latest CBI Industrial Trends orders data came in below forecasts with a reading down from June’s figure of 11 to 2 in July.
Despite that manufacturers were still confident and order books were at multi-decade highs.
The Euro is likely to soften further against both the Pound and US Dollar as the session progresses if the latest US inflation data comes in strongly and whether the EU does agree to harsh sanctions being introduced against Russia.
Wednesday sees the release of the latest Eurozone consumer confidence data. Forecasts suggest that the report will remain at -7.5 but with the news out of Ukraine and a weakening economy we can expect it to come in below that, a surprise move higher however could offer support to the single currency.
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,1.3483 ,
Euro,,British Pound,0.7899 ,
Euro,,Australian Dollar,1.4354 ,
Euro,,Canadian Dollar,1.4493 ,