Dear Subscriber, Please find below our latest update for your chosen currency. If you need to discuss your requirements further, please contact your account manager or call us on 0800 612 9625 or +44 (0)1736 335250. GBP EUR Market Update The Euro rallied by just under a cent against the Pound last week as decent Eurozone PMI data and comments from the Bundesbank bolstered demand for the single currency.
The Pound to Euro exchange rate remained fairly close to the 1.1730 level at the beginning of last week's session, before sliding half a cent to 1.1680 on Tuesday as markets digested comments regarding interest rates from ECB board member and Bundesbank President Jens Weidmann. The German Central Banker said that interest rates would not remain at the current record low 0.50% if changes in economic conditions, such as inflationary pressures, were to arise.
The comments struck a stark contrast to remarks from ECB President Mario Draghi suggesting that "interest rates would remain low for a prolonged period of time", but Weidmann was quick to point out that Draghi deliberately employed an imprecise timespan to account for any unforeseen changes in the economic situation.
Sterling clawed back around 0.3 cents on Wednesday as the Confederation of British Industry reported that UK Manufacturing Output struck a 2-year high score of 0.0 in August, well above the long-term average of -17.
The Euro's good form returned on Thursday as the overall Eurozone Composite PMI, which accounts for both Manufacturing and Service Sector output across the 17-nation bloc, printed at a 26-month high of 51.7. The better-than-expected score was largely driven by the outperforming German economy, which racked up a 2-year high Manufacturing Industry score of its own. The robust PMI data supports the view that the currency bloc will continue to expand during the rest of the year and subsequently the single currency strengthened by around half a cent against the Pound, bringing GBP/EUR down to 1.1660.
Sterling weakened further on Friday as Eurozone Consumer Confidence struck a 2-year high of -15.6 and markets began to speculate that Bank of England Governor Mark Carney will employ a dovish tone in his monetary policy speech later this week.
GBP/EUR has continued to slide so far in this week's session, hitting a low point of 1.1606 as the German IFO Business Climate index hit a 16-month high of 107.5. The positive IFO print, combined with the recent uptick in German GDP and strong European PMI reports, boosts the prospect of an earlier-than-anticipated hiking of interest rates in the currency bloc.
Later on this week German Unemployment is expected to hold steady at 6.8%, whilst the continent-wide score is predicted to remain at a dire 12.1%. German Retail Sales are expected to rebound from -2.8% to +1.7% and UK Mortgage Approvals are set to increase mildly. The real market-moving releases are most likely to be tomorrow's BoE Carney speech and Thursday's German CPI inflation print.
Carney is widely expected to play down talk of an early rise in UK interest rates, however, it will be interesting to see how seriously markets take his comments; if traders choose to ignore Carney's forward guidance then Sterling has the potential to rally back towards 1.1700, but if the BoE Governor's dovish tendencies are taken onboard then GBP/EUR could slide towards 1.1500.
The German CPI print is important because expectations of a rate hike hinge on inflation remaining strong, however, economists predict that Consumer Prices declined by -0.2% in August, which would be viewed as bearish for the single currency. Heads Up: Summary of major upcoming data releases that we think may move the market. | Date | Time | Issuing country/region | Data Item | Market Expectation | Market Sensitivity | | | | | | | | | Aug 28 | 13:45 | GBP | Bank of England Governor Carney to Speak on U.K. Economy | | | Aug 29 | 08:55 | EUR | German Unemployment Change (AUG) | -5K | | Aug 29 | 08:55 | EUR | German Unemployment Rate s.a. (AUG) | 6.8% | | Aug 29 | 13:00 | EUR | German Consumer Price Index (YoY) (AUG P) | 1.7% | | | Aug 30 | 07:00 | EUR | German Retail Sales (YoY) (JUL) | 1.7% | | | Aug 30 | 09:30 | GBP | Mortgage Approvals (JUL) | 59.0K | | | Aug 30 | 10:00 | EUR | Euro-Zone Consumer Price Index - Core (YoY) (AUG A) | 1.1% | | | Aug 30 | 10:00 | EUR | Euro-Zone Unemployment Rate (JUL) | 12.1% | | | | | | | Sensitivity | | | | | | | Medium | | | | | | | High | | If you need any further assistance, or require a live dealing quote - please do not hesitate to contact me on 01736 335250 or send an email to info@torfx.com Regards,
TorFX 
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