Overnight the Euro softened against a rallying US Dollar after the Federal Open Market Committee signalled that it was largely comfortable with the plan to taper quantitative easing this year.
The Euro was slightly higher against the Pound however prior to the publication of Eurozone and German PMI reports, this week’s first influential piece of news for the currency bloc.
The Euro/Pound pairing is currently trading in the region of 0.8544
In the hours ahead the Euro is likely to extend gains against Sterling and advance on several of its other most traded rivals as the German services and manufacturing sectors grew by more than anticipated.
Although French PMI failed to meet expectations, the gauge of German manufacturing climbed to 52.0 from 50.7, beating economists’ forecasts for a rise to 51.1.
The index of German services also greatly exceeded predictions, surging from 51.3 to 52.4 in August.
In response to the data Markit’s senior economist Tim Moore stated: ‘The survey provides confirmation that Germany’s economy is back on a solid footing and likely to remain in expansion through the third quarter of 2013. Manufacturing was an especially bright spot in August, with the latest figures suggesting that a rebound in export orders helped output growth accelerate to its strongest for over two years.’
If Eurozone PMI also surprises to the upside the Euro could break away from its recent range-bound relationship with the Pound.
Before the weekend UK GDP data will be the main cause of additional EUR/GBP movement.
Euro (EUR) Exchange Rates
As of 08:50
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3325 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8544 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4820 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6965 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3970 >