Pound Sterling to Euro (GBP/EUR) Regains Ground Following Strong US Non-Farm Payroll Data
Since midday the Pound Sterling has reversed its fortunes, trending around 0.5% up at 1.4066, thanks to better-than-expected US Non-Farm Payroll data. Printing at 271k, the payrolls rose dramatically, eclipsing the forecast 185k. In response, the Euro plummeted against the US Dollar, dropping by over 1.5% to a low of 1.0705. The weakening of the common currency saw Sterling reclaiming the ground it had lost earlier today, although it is still far from recovering from yesterday’s dovish Bank of England policy decisions.
Disappointing data from Europe hasn’t been enough to strengthen the position of the Pound Sterling to Euro (GBP/EUR) exchange rate following yesterday’s dovish announcements from the Bank of England (BoE).
GBP/EUR Exchange Rate Falls Thanks to BoE Announcement Fallout and Weak UK Data
The Pound has continued sliding against the Euro since the dovishness of the BoE’s decision to hold interest rates at 0.50% and forecast that inflation would not rise above the target 2% until 2017. Having fallen from a high of 1.4193 yesterday morning, at the time of writing the Pound is on currently on track to hit a weekly low, having moved -0.47% since the London session began.
The Pound’s position hasn’t been helped by the release of disappointing data which showed that UK industrial production disappointed on both the month and year.. Month-on-Month (MoM) Industrial Production fell from 0.9% to -1.1%, a contraction marginally larger than the anticipated -0.1%. Year-on-Year (YoY) figures for September printed at 1.1%, lower than the forecast 1.3% and representing a fall of 0.7% on last month’s figures.
There was some positive news for the Pound however. The overall trade deficit has shrunk, beating a forecasted rise to drop to -£1353 from -£2095, although the goods-trade deficit grew to £32.2 billion, increasing £6 billion. Month-on-Month manufacturing beat predictions to hit 0.8%, up from 0.4% in August. Meanwhile, yearly manufacturing increased from -0.9% to 0.6%, narrowly bettering the anticipated 0.7%. Despite this, yesterday’s BoE announcements were weighing heavily on the market.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3887 to 1.3986.
EUR/GBP Exchange Rate Up Today Despite Poor Industrial Production Figures from Germany
While disappointing Industrial Production data from Germany saw the common currency weaken against the US Dollar (USD), the data was not enough to halt the Euro’s gains on the Pound. MoM Industrial Production printed below August’s figures at a surprising -1.1%, drastically below the expected rise to a positive rate of 0.5% forecast by Bloomberg economists. YoY data was expected to fall from 2.7% to 1.3%, but the actual result printed at 0.2%.
‘Disappointing industrial production doesn’t bode well for German third-quarter gross domestic product. The Chinese and emerging-markets slowdowns are also leaving their marks on the euro zone’s largest economy,’ explains Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt.
The Euro is currently up around 0.5% on the Pound, trending between 0.7147 and 0.7195.
US Non-Farm Payroll Data Forecast to See Pound Sterling Fluctuate Against Euro
If this afternoon’s US Non-Farm Payroll results match up to expected forecasts the Pound could regain some ground against the Euro. The strength of the ‘Greenback’ is strongly linked to weakness in the single currency, so if the Dollar advances against the Euro this could have the knock-on effect of causing appreciation in the GBP/EUR exchange rate.