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Euro vs Pound, Euro vs US Dollar Exchange Rate Volatility Likely on Today’s PMI Printings

The Euro managed to rise against the Pound but dipped against the US Dollar at the close of trading yesterday; today is set to see exchange rate turbulence on PMI printings.

  • Euro losses recorded after Draghi comments – Forecast-beating confidence failed to trigger rally
  • Pound Sterling uncertainty followed ‘Hard Brexit’ talk – Hopes of transitional deal for UK exit from EU
  • US Dollar rally recorded on home sales stats – President-Elect pledged to leave TPP trade deal
  • Eurozone PMIs set to rise in November – Autumn Statement due Today

The Pound found itself in low demand due to concerns of a rough exit from the EU, while the US Dollar received a late boost from strong domestic data printings.

Euro Exchange Rate News: Draghi Holds Fast on 0%, Confidence Flash Better-than-Expected

The Euro was able to climb by 0.3% against a flagging Pound on Tuesday afternoon, although against the US Dollar, a decline of -0.4% was recorded.

The overall mixed performance of the Euro was attributed to a pair of Eurozone announcements, which came over late Monday and Tuesday afternoon.

Initially, European Central Bank (ECB) President Mario Draghi gave a speech on late Monday, focusing on the fact that 0% interest rates were likely to persist for the ECB for the foreseeable future, owing to the objective of raising low levels of inflation.

The more positive news on Tuesday was that the November consumer confidence flash had ‘improved’ from -8 to -6.1, a better outcome than expected.

Pound Weakened by Brexit Worries while US Dollar Rally Triggered on Home Sales

Tuesday’s widespread losses for Sterling came in sharp contrast to Monday’s gains, which stemmed from hopes of a ‘Transitional Brexit’ replacing a more abrupt ‘Hard Brexit’, that negates any single market ties.

The Pound’s performance against the Euro and US Dollar during Tuesday progressively worsened, owing to the pervasive effect of fears that a ‘Hard Brexit’ could be aimed for by EU member states, to ‘punish’ the UK for leaving.

The US Dollar managed a late rally on Tuesday against the Euro and the Pound, which came after the announcement of the US’s existing home sales for October. On the month, a rise was recorded in the place of a forecast loss, coming from 5.49m to 5.6m.

Adding additional USD support was the Richmond Fed manufacturing index for November, which rose from -4 to 4 points. Less helpfully, President-Elect Trump announced that he would take the US out of the Trans-Pacific Partnership (TPP), which triggered major market unrest.

US Dollar bills

Future EUR GBP USD Forecast: Volatility Expected on Incoming PMIs, Autumn Statement and Goods Orders

The Eurozone, UK and US are all due to release high-impact data today, which makes picking the most in-demand of the Euro, Pound and US Dollar a difficult prospect.

Starting off proceedings will be the Eurozone and German PMI flashes for November. These are expected to show a dip for Germany’s composite, services and manufacturing scores, but a rise for the overall Eurozone variants.

Following on from this will be the UK’s contribution, consisting of the early afternoon’s Autumn Statement from Chancellor Philip Hammond. The present week has been rife with speculation about what the statement will entail, with present estimates being that a gloomy forecast may be countered by a commitment to helping those ‘Just About Managing’ (JAM).

Closing off data releases will be the US, where the afternoon is expected to bring the October durable goods orders and new home sales stats. Predictions have been contrasting for the outcomes, consisting of a rise out of a negative range for orders and a drop in new home sales.