The Euro softened against the Pound on Tuesday as a combination of disappointing unemployment data out of Spain, a strong UK construction PMI and speculation that the European Central Bank will announce stimulus measures later in the week all weighed upon the single currency.
The Euro had been trading higher against the Pound early in the session after it was supported by positive manufacturing data out of the Eurozone. Sterling was under pressure from a disappointing report.
As the morning progressed however the Euro came under pressure following the release of data which showed that the number of Spaniards out of work surged in January, creating concern over the Spanish economy.
A separate report released later in the session sent the Pound higher after it showed that construction activity in the UK picked up speed in January. The Markit/CIPS construction PMI jumped to 64.6 from the previous month’s figure of 62.1 and was the quickest expansion in construction activity since August 2007. The figure smashed economist forecasts for a reading of 61.5. Any figure above 50 indicates expansion.
Adding to the pressure on the Euro was increased speculation that the ECB could be planning to announce that it will take measures to help stimulate the region’s economy on Thursday’s latest interest rate decision day. Deflation is a growing concern and pressure is building on ECB President Mario Draghi for him to take action. Draghi is rumoured to be contemplating ending the sterilization of crisis-era bond purchases which could provide added liquidity into the Eurozone’s financial system.
The Euro could see volatility on Wednesday with the release of the latest Eurozone retail sales and services PMI data. Investor attention will now also be focused on Thursday’s ECB interest rate decision and press conference.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3518 ,
Euro,,British Pound,0.8271 ,
Euro,,Australian Dollar,1.5220 ,
Euro,,Canadian Dollar,1.5007 ,