A hawkish bank of England, coupled with Italian political concerns and impressive UK housing data saw the Euro trapped in a bearish relationship with the Pound as the local session began.
The Pound extended gains against the common currency for a fourth day after UK house prices surged by the most significant amount for six years.
As the morning progressed the Euro continued to trade lower against the Pound after German retail sales climbed by less-than-expected.
Economists forecast a month-on-month increase of 0.8 per cent in August, following a revised decline of 0.2 per cent in July.
However, sales adjusted for inflation actually climbed by 0.5 per cent.
Sales were up 0.3 per cent year-on-year rather than the 0.6 per cent expected, although July’s YoY gain was upwardly revised to 2.9 per cent.
The Euro/Pound Sterling pairing is currently trading in the region of 0.8361
The result prompted this response from economist Gerd Hassel; ‘Germany’s economy is robust even as growth is expected to slow down a bit in the third quarter. Risks from the debt crisis in the Eurozone remain but if nothing unforeseen happens, the economy will continue to grow.’
However, while Germany’s economic strength has helped the Eurozone emerge from a record long recession; economists have recently commented that the currency bloc’s record high levels of unemployment are unlikely to fall in the near future.
In a survey for Bloomberg news the majority of economists have forecast that unemployment held at 12.1 per cent in August, with one Milan-based industry expert asserting; ‘Europe is faced with a high level of structural unemployment and this is not going to change any time soon. The recovery is happening painfully slowly and that’s another reason why we’ll see jobless rates far above 11 per cent well into 2015.’
Employment figures for the Eurozone are scheduled for release tomorrow.
While further EUR/GBP movement is likely to be inspired in the hours ahead by UK mortgage approval and Eurozone inflation data, investors will largely be focusing on any developments in the Italian political fracas and the potential US Federal shutdown.
Euro (EUR) Exchange Rates
As of 09:00
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3490 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8361 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4505 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6310 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3906 >