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 Sterling rallied by around a cent against the Euro last week as the recent surge of encouraging UK data releases continued. Minutes from the Bank of England, Unemployment data and Retail Sales all printed positively for the Pound.
The week began fairly slowly as no fresh significant data was added to the equation, but Sterling began to strengthen on Tuesday afternoon as a so-called 'fat finger trade' led to a series of automatic stop-loss orders in the Pound's favour. The term 'fat finger trade' is used to describe a case of human error where an unintentionally large transaction is put through a broker's trading system, leading to an overly aggressive buy or sell order. On this occasion the 'fat finger trade' sent GBP/EUR temporarily above the 1.1700 mark.
During the morning it was reported that the UK Consumer Price Index decelerated from 2.9% to 2.8% as expected in July. Although the cooling inflation print is a step towards the Bank of England's 2.0% target there is still a long way to go, leaving investors feeling cautious with regards to the Bank's ambitious projections for inflation to recede in the second half of the year. In the Eurozone Industrial Production printed at an impressive 0.7% but the single currency was unable to garner support in relation to the score.
The Pound to Euro exchange rate struck a fresh 7-week high of 1.1724 on Wednesday despite the fact that the Eurozone posted its first positive quarterly GDP figure since 2011. Sterling was propelled higher as markets reacted to the news that one policymaker at the BoE voted for a smaller timeframe in which interest rates would be kept at the current record low of 0.50%. The Pound also appreciated on the back of a positive Unemployment report; the headline Unemployment Rate remained at 7.8% but it was reported that 69,000 people found work during the three months to June and that Initial Jobless Claims fell steeply by -29,200 during July.
Sterling soared to another day of gains on Thursday as UK Retail Sales grew at their fastest pace for over 2.5 years. July's impressive monthly improvement of 1.1% brought the annualised figure up to a stronger-than-anticipated 3.1% and traders sent GBP/EUR up to 1.1720 in response to the dataset.
Due to a dearth of important data releases GBP/EUR remained fairly flat on Monday, but the Euro has gained around 0.3 cents so far this week in response to comments from the Bundesbank indicating that an interest rate hike is still possible, despite guidance from ECB Chief Mario Draghi that rates will remain low for a "prolonged period of time".
The rest of the week is likely to be coloured by August's Eurozone PMI results, which are expected to show positive growth all around leading to a Composite Purchasing Managers Index of 50.9. This score is likely to support the single currency as it would signal that economic output, if not the labour market, is improving in the currency bloc. Without any domestic UK data to further bolster demand for Sterling the direction of GBP/EUR is likely to be dictated by the attitude that traders take to the European Central Bank. If investors continue to price in a liquidity boosting scheme then the Euro could struggle to find positive momentum against the rejuvenated Pound, but if markets take the Bundesbank's rate hike comments seriously then it could relieve a significant amount of downward pressure from the single currency's shoulders. 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 21 | 09:30 | GBP | Public Sector Net Borrowing (Pounds) (JUL) | -5.0B | | | Aug 22 | 09:00 | EUR | Euro-Zone Purchasing Manager Index Manufacturing (AUG A) | 50.6 | | | Aug 22 | 09:00 | EUR | Euro-Zone Purchasing Manager Index Services (AUG A) | 50.2 | | | Aug 22 | 09:00 | EUR | Euro-Zone Purchasing Manager Index Composite (AUG A) | 50.9 | | | Aug 23 | 09:30 | GBP | BBA Loans for House Purchase (JUL) | 39000 | | | Aug 23 | 09:30 | GBP | Gross Domestic Product (QoQ) (2Q P) | 0.6% | | | Aug 23 | 15:00 | EUR | Euro-Zone Consumer Confidence (AUG A) | -16.5 | | | | | | | 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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