Royal Bank of Scotland (RBS) Share Sale Increases Interest in Pound Sterling (GBP) Ahead of Services PMI Data
Following the dip triggered by the worse than expected Construction PMI figure for the UK, the Pound (GBP) recovered much of its losses in the later hours of the day, to bring the GBP/EUR exchange rate up from 1.4194 to a daily peak of 1.4303. Likely this was prompted by interest in the sell-off of Royal Bank of Scotland (RBS) shares along with the anticipation of a good Services PMI today.
At time of writing the GBP/EUR exchange rate is in the range of 1.4334 while EUR/GBP is trending around 0.6973.
A worse than expected Construction PMI encourages more dovish trends for the Pound (GBP) as the common currency (EUR) remains steady with the anticipation of tomorrow’s Retail Sales data.
Euro (EUR) Unimpeded by Dropping Prices in Greek Stock Market as Sterling (GBP) Faltered on Mixed Reception for Manufacturing PMI
As expected, the Athens stock market took a serious hit yesterday upon reopening for the first time in five weeks, with banking stocks in particular taking an overall dive of 30%. Nevertheless, the Euro (EUR) weathered the storm with minimal damage as traders were not rushing to abandon the common currency when the resumption of trade in Athens could be seen to signal a further positive step on the road to a Greek recovery. While the GBP/EUR exchange rate was initially boosted to a peak of 1.4256, this gain was shed over the course of the day as the Euro held firm. The common currency was also boosted by the final Manufacturing PMI figures for the Eurozone, which were positively revised in spite of the Greek result being particularly weak.
A seemingly positive Manufacturing PMI for the UK, meanwhile, reported a slight increase in the sector’s growth, however this was merely seen to balance out the lowered figure of the previous month. Effectively halting the manufacturing decline that the economy has been experiencing over recent months, the result was nevertheless branded stagnation as the relative strength of the Pound (GBP) has forced an increasing reliance on domestic sales rather than exports. This relative pessimism saw the GBP/EUR pairing initially fall to 1.4211, before ultimately pickling back up.
Construction Sector Decrease Compounds Issues for Pound (GBP) to Send GBP/EUR Exchange Rate Moving Down
Nationwide Housing Price date met forecasts this morning, prompting a limited rally for the pairing as GBP/EUR rose back to 1.4234 ahead of the release of the Construction PMI figure. Although the construction industry accounts for just 7% of the nation’s economic output, pundits will not have been pleased to see a decrease posted today as the result came in at a decline to 57.1 instead of an anticipated rise to 58.3. On top of the manufacturing figures this does not bode especially well for the Pound, as the UK’s economic health appears to be in something of a worse state than previously assumed.
Aside from Greek shares dipping further today there is not much data from the Eurozone that might trigger increased movement for the Euro.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Sterling Rally Possible with Upcoming Bank of England (BoE) Releases on Thursday
Retail Sales data for the Eurozone is due out tomorrow and may hold the potential for Euro consolidation should they meet the forecast of 2.0% or perhaps come in with an unexpected rise in spite of seemingly adverse conditions. Thursday’s Retail PMIs could also trigger further gains against the currently dovish Pound, although with the Bank of England (BoE) Inflation Report and Rate Decision being released on the same day, there could equally be strong potential for a Sterling rally.
Continuing worry over the Greek repayment deadline to the European Central Bank (ECB) on 20th August may also weigh in the Pound’s favour, as bailout talks with creditors have the potential to drag out over the coming weeks and to result in another default for the Hellenic nation.
Current GBP, EUR Exchange Rates
Presently the GBP/EUR pairing is trending in the range of 1.4218 and EUR/GBP is relatively static around the 0.7032 mark.