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Euro to GBP steady before UK Construction Data, Euro to USD Higher after Retail Sales Report


The Euro tumbled to its weakest level since the end of 2012 against the Pound on Wednesday and dropped to a four-month low against the US Dollar.

Following the release of a better than expected UK unemployment report the Pound advanced for a sixth consecutive day against the weakened Euro. The run of gains is the longest stretch since last September and shows no sign of abating.

The Euro remains under pressure against the majority of major peers as last week’s announcement by the European Central Bank that it had cut interest rates and introduced a negative deposit rate on the Eurozone’s bank sent investors looking elsewhere for better returns for their investments.

The Pound surged against the Euro after data released by the Office for National Statistics showed that UK unemployment fell to its lowest-level in over five years.

The jobless rate fell to 6.6% in the three months leading to April. The fall was more than economists had forecast as most had expected a drop to 6.7%.

Also lending support to the Pound was a separate report which showed that the number of people making claims for unemployment benefits fell by 27,400 in May, beating forecasts for a fall of 25,000. The drop in claimants was the 19th consecutive fall and took the claimant count to its lowest level since October 2008.

However, the report also showed that weekly earnings rose by just 0.7% in the three months to April, still well below inflation, which hit 1.8% in April.

Euro to GBP Updated: 12/06/2014

While the Euro to Pound exchange rate remains close to an 18-month low, the Euro to USD pairing has trimmed previous declines thanks to an upbeat industrial output report for the Eurozone.

Industrial output was shown to have increased by twice as much as forecast in April, upping the odds of the currency bloc posting a better growth figure in the second quarter of the year.

According to the latest figures, industrial production increased by 0.8 per cent in April, month-on-month following a drop of 0.4 per cent in March.

A monthly increase of just 0.4 per cent had been envisaged.

In the opinion of economist Evelyn Herrmann; ‘Q2 is shaping up stronger than Q1. We forecast GDP to grow 0.4 per cent quarter-on-quarter in Q2, following the disappointingly soft 0.2 per cent QoQ expansion in Q1’.

A lack of pertinent UK news did restrain the Euro to GBP exchange rate, but it remains 0.30 per cent softer.

The Euro to USD exchange rate trimmed its decline to just 0.05 per cent before the release of US retail sales figures.

As trading on Thursday progressed the Euro to Pound exchange rate maintained earlier declines in spite of the Eurozone’s upbeat industrial production report.

If tomorrow’s UK construction output data prints positively and the final German inflation figures confirm stagnant price growth the Euro to GBP exchange rate could well test new lows before the weekend.

However, the Euro was able to advance on the US Dollar during the North American session as US advance retail sales failed to show the increase expected by economists.

Sales climbed by 0.3 per cent in May, half the gain projected. US initial jobless claims also rose by more-than-anticipated. As a result the Euro to USD pairing advanced by 0.13 per cent

Economist Milan Mulraine said this of the retail sales report; ‘The continued gains during the first two months of the second quarter suggests that consumers are continuing to hold their side of the bargain, building on the strong momentum at the end of the last quarter.’

Tomorrow’s US University of Michigan confidence index is expected to show an increase in sentiment. Another disappointing result could cause further Euro to USD losses before the weekend.

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,1.3538,
Euro,,British Pound,0.8043,
Euro,,Australian Dollar,1.4368,
Euro,,New Zealand Dollar,1.5595,
Euro,,Canadian Dollar,1.4699,

As of 16:30 GMT