The Euro to Pound Sterling (EUR/GBP) exchange rate softened to 0.78 and the Euro to US Dollar (EUR/USD) exchange rate fell to 1.76 a new 9-year low as more weak economic data out of the Eurozone increased pressure on the European Central Bank to introduce more stimulus measures, which could include a quantitative easing programme.
German Data Disappoints
Data released early in Thursday’s session showed that German factory orders fell more than forecast in November and sentiment across the Eurozone remained weak. A separate report also showed that producer price inflation in the region declined.
According to the Berlin based Economy Ministry, German factory orders fell by -2.4% in November following a revised increase of 2.9% recorded in October. The drop was a lot sharper than the 0.8% drop economists had been expecting.
Producer prices across the currency bloc dropped by 0.3% from October said Eurostat. Economists had been forecasting for a decline of 0.1%.
‘A number of large entities and investors around the world are unloading Euros because obviously it is costing them to hang on them. There’s still some room on the downside,’ said Neil Jones, the head of hedge fund sales at Mizuho Bank Ltd.
Following the release of the data, the Euro slipped to its weakest level since 2005 against the US Dollar to extend its longest run of losses since May 2014, the single currency also extended its losses against the Pound.
Bank of England leaves interest rates unchanged
The Pound Sterling was able to maintain gains against the single currency despite the Bank of England leaving interest rates at a record low of 0.5% and choosing to leave its monthly bond-buying programme at £375 billion. A statement released alongside the rate decision showed that the bank’s monetary policy committee remains divided as to when a rate rise should occur. Despite recent data suggesting that the UK is experiencing a slowdown, some economists are forecasting for rate hike to occur in August.
‘2015 should be a good year for real household disposable income growth, helping to fuel consumer spending growth. This combination of rising wages and strong consumer demand leads us to believe that the BoE will start to raise interest rates from August onwards,’ said James Knightley from ING.
The US Dollar meanwhile continued to receive support from hawkish Federal Reserve policy meeting minutes and data, which showed that the number of Americans filing for unemployment benefits fell last week by 4,000.
The figure further highlights the diverging trends of the US and Eurozone economies. Unemployment in Europe remains at stubbornly high levels.
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,1.1787 ,
Euro,,British Pound,0.7819 ,
Euro,,Australian Dollar,1.4546 ,
Euro,,Canadian Dollar,1.3942 ,