The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in a tight range on Friday as disappointing UK Construction data and concerns over the Greek situation weighed upon the currency pair.
The Pound Sterling to Euro (GBP/EUR) exchange rate touched a session low of 1.3976
Sterling remained under pressure from comments made by Bank of England governor Mark Carney on Thursday. Mr Carney suggested that the Pound’s strength could lead to the BoE delaying a hike to interest rates. Following his comments, the UK currency fell sharply and gave up the majority of the strong gains it had achieved against the Euro earlier in the week.
On Friday, the Pound remained under pressure due to the release of far weaker than forecast construction activity data released by the London based Office for National Statistics (ONS). The data showed that the UK construction sector suffered its largest contraction in over a year in the first month of 2015 as the number of homes built fell sharply.
Construction output fell by -2.6% in January compared to the preceding month. Economists had been expecting a rise of 1.3%.
Housing output tumbled by 5% on a monthly basis, dragging the annual rate down to 0.8%. The monthly fall in housing output was driven by both the public and private components, while the annual growth rate eased due to a sharp contraction in public housing, the ONS said.
‘While this data appears to show a continuation of the disappointing output registered in the final few months of 2014, other industry surveys suggest 2015 has had a better start. More than six years after the recession hit, the industry in dealing with long-term challenges, including tight margins, high input costs and a perennial shortage of subcontractors. The sector is resilient and firms will remain vigilant in the hope that spending on construction and infrastructure increases as the year progresses,’ said Stefan Friedhoff from Lloyds.
‘Grexit’ Fears Rise… Again
The Euro meanwhile was under pressure from the European Central Bank’s quantitative easing programme and concerns over the situation in Greece.
The Eurogroup of finance ministers has gathered in Brussels to discuss the reform plans put forward by the Greek government as part of its bailout review.
Relations between Germany and Greece continue to suffer as a poll showed that more than half of Germans believe that Greece should leave the Eurozone. The survey released by the German broadcaster ZDF shows that 80% are in favour of a ‘Grexit’. The survey comes after Greece said that it intended to press ahead with trying to claim war reparations and as an official complaint was filed against German Finance Minister Wolfgang Schaeuble.