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 improved by just under a cent against the Euro last week as traders continued to price in a rate hike before 2016, despite further protestations from Bank of England Governor Mark Carney.
The single currency declined by around half a cent to 1.1600 last Tuesday as the currency bloc benefitted from a triple set of positive German IFO survey results. Expectations inched forward from 102.4 to 103.3, Current Assessment advanced from 110.1 to 112.0 and the Business Climate indicator, which is regarded as the most important reading, accelerated from 106.2 to a 16-month high of 107.5. The better-than-expected figures out of the Eurozone's largest economy boosted the Euro as hopes of a strong revival in the second half of the year proliferated.
After striking a 3-week low of 1.1562 on Wednesday morning the Pound to Euro exchange rate rallied by around 0.6 cents as BoE Governor Mark Carney's latest batch of dovish rhetoric was not seen to add anything new to the table. Carney reiterated his forward guidance from earlier on in the month that interest rates would remain at the current record low until the Unemployment Rate receded to 7.0%, but markets continued to price in a rate hike ahead of the BoE's 2016 projection. The uptick in interest rate speculation brought the benchmark 10-year UK Gilt yield to a 2-year high of 2.827%, which attracted speculative traders to invest in the Pound.
On Thursday the Pound strengthened against the Euro by a further 0.8 cents as markets reacted to some soft data in the 17-nation bloc. The German Unemployment Rate held firm at 6.8%, but it was reported that 7,000 people fell out of the labour market in August. German inflation also underwhelmed, printing at an annualised rate of 1.5%, as Consumer Prices stagnated during August.
Sterling breached the 1.1700 level on Friday and posted a 0.3 cent daily gain as UK Mortgage Approvals advanced to a 5-year high of 60,800. The single currency was also impacted by a weaker-than-expected score of 1.3% for Eurozone CPI inflation, which was seen to make the prospect of an interest rate hike from the European Central Bank even less realistic. The Unemployment Rate for the currency bloc printed at 12.1% for a second month running, slightly below May's all-time peak but still catastrophically high.
We have quite a busy week ahead of us in terms of European data releases: Eurozone PMI readings are expected to remain above the 50.0 level that separates growth from contraction, but they are likely to be overshadowed by another trio of glittering British Purchasing Managers Indexes, which could lead to more gains for Sterling against the single currency. Indeed, GBP/EUR has already rallied half a cent this morning in reaction to a 2.5-year high Manufacturing PMI print of 57.2.
Also on the agenda are a couple of policy decisions from the BoE and the ECB. The UK Central Bank is widely expected to maintain its current level of monetary easing, and is therefore not likely to have a massive impact on Sterling. However, the ECB could conceivably unleash a new liquidity-boosting scheme and this would work to devalue the Euro. Bear in mind that the majority of market-players do not expect any new non-standard measures from the European Central Bank, just that it is a possibility.
With the Pound to Euro exchange rate currently at a 2-month high in the region of 1.1780, it is entirely likely that Sterling could rally towards the next significant resistance at 1.1900 if UK data continues to impress. This would represent the best rate of exchange since May 6th. 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 | | | | | | | | | Sep 3 | 09:30 | GBP | Purchasing Manager Index Construction (AUG) | 56.9 | | | Sep 4 | 09:00 | EUR | Euro-Zone Purchasing Manager Index Composite (AUG F) | 51.7 | | | Sep 4 | 09:00 | EUR | Euro-Zone Purchasing Manager Index Services (AUG F) | 51 | | | Sep 4 | 09:30 | GBP | Purchasing Manager Index Services (AUG) | 59 | | | Sep 4 | 10:00 | EUR | Euro-Zone Gross Domestic Product s.a. (QoQ) (2Q P) | 0.3% | | | Sep 4 | 10:00 | EUR | Euro-Zone Retail Sales (YoY) (JUL) | -0.3% | | | Sep 5 | 11:00 | EUR | German Factory Orders n.s.a. (YoY) (JUL) | 2.7% | | | Sep 5 | 12:00 | GBP | Bank of England Rate Decision (SEP 5) | 0.5% | | | Sep 5 | 12:00 | GBP | BoE Asset Purchase Target (SEP) | 375B | | | Sep 5 | 12:45 | EUR | European Central Bank Rate Decision (SEP 5) | 0.5% | | | Sep 5 | 12:45 | EUR | ECB Deposit Facility Rate (SEP 5) | 0.0% | | | Sep 7 | 09:30 | GBP | Industrial Production (YoY) (JUL) | -1.7% | | | Sep 7 | 09:30 | GBP | Manufacturing Production (YoY) (JUL) | -0.7% | | | Sep 7 | 11:00 | EUR | German Industrial Production n.s.a. and w.d.a. (YoY) (JUL) | 0.6% | | | | | | | 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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