The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a new session high on Thursday afternoon after the latest Eurozone data showed that consumer confidence across the currency bloc fell for a second consecutive month. The Pound Sterling to US Dollar (GBP/USD) exchange rate also advanced as US Data disappointed yet again.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a session high of 1.4099
Positive UK retail sales data released earlier in the session had already been supporting the Pound Sterling but it made further gains as the Euro was weakened by a report, which showed that consumer confidence in the Eurozone deteriorated at a faster-than-forecast pace in May.
According to the European Commission, the regions flash consumer confidence index fell from April’s figure of -4.6 to -5.5. Economists had been expecting a figure of -4.8. Confidence across the wider European Union also fell to reach a figure of -4.
‘The deterioration in consumer confidence can be partly explained by the fact that rising oil prices are felt at the pump and the financial market turmoil. But even after this correction, Eurozone consumers remain upbeat, with sentiment still well above its long term average of -12.5. This leaves scope for retail sales to rebound after their disappointing setback in March. Barring a Greek accident, the economic outlook for the Eurozone remains brighter than it has ever been in recent years, with scope for further gains in both consumption and business investment,’ said an economist from ING Bank.
Also putting pressure on the Euro was the release of the minutes of the European Central Bank’s May policy meeting. The governing council said that it believes that its quantitative easing programme is working and that it does not intend to scale it back yet.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a session high of 1.5700
The US Dollar weakened against most of its major peers after a string of US data releases came in below expectations. The number of Americans filing for unemployment benefits increased more than expected last week, adding to worries over the health of the US labour market. Following on from that was Flash Manufacturing PMI data, which came in at 53.8, below expectations for a figure of 54.1.
The National Association of Realtors also published data, which showed that existing home sales fell 3.3% in April to 5.04 million units from the previous month’s revised 5.21 million units. Analysts had expected existing home sales to rise 1.0% to 5.24 million units last month.
Adding to the string of disappointing data was a Philadelphia manufacturing index, which fell from 7.5 to 6.7. The separate Kansas Manufacturing Index fell to a reading of -13 from -2.