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 is currently trading close to its strongest level against the Euro since January 16th as UK data continues to impress.
The Pound to Euro exchange rate commenced last week's trading session at around 1.1880, but Sterling dipped initially as traders got wind of a better-than-expected Eurozone confidence result: the Sentix Investor Confidence indicator rose dramatically from -3.5 to a 2-year high of +6.5 in September, reflecting positively on economic conditions inside the currency bloc.
However, the single currency was unable to hold onto Monday's gains for long and GBP/EUR fought back on Tuesday as Italian GDP was revised lower by one percentage point to -0.3% in the second quarter. The Euro was also impacted by political concerns in Italy, as Silvio Berlusconi threatened to withdraw support for Enrico Letta's coalition government.
Sterling edged higher towards 1.1900 on Wednesday as it was reported that UK Unemployment took an unexpected turn for the better in the run-up to July: the headline jobless rate fell from 7.8% to 7.7% as 80,000 new jobs were created. The Pound also improved on news that the Claimant Count fell by -32,600 to its lowest level since February 2009. The encouraging labour market figures stoked speculation that the Bank of England could be persuaded to raise interest rates earlier than intended and this led to an uptick in demand for Sterling as UK Gilt yields soared.
GBP/EUR managed to breach resistance at 1.1900 on Thursday as markets reacted to a poor Eurozone Industrial Production print of -1.5% for August. Five times softer than forecasts of -0.3% the disappointing figure showed that even Germany struggled with output last month and this irked investors.
The Pound surged again on Friday, posting a daily gain of around 0.75 cents as it hit a fresh 8-month high against the Euro. The latest rally was fuelled by a robust 2.2% print for UK Construction in July, which suggested that the British economic engine was firing on all cylinders.
Later this week the headline UK CPI inflation rate is predicted to come in at 2.7%, slightly less than the 2.8% registered the previous month: this slender decline could dampen Sterling sentiment because it could be seen to suggest that price pressures are receding towards the BoE's 2.0% target. However, a higher-than-anticipated reading could boost GBP/EUR as rate hike speculation proliferates.
In terms of European data, the German Economic ZEW Surveys are expected to show a slight uptick in confidence, which could give the single currency a mild boost. The main driver behind market movement this week, however, is likely to be the Federal Reserve's monetary easing decision on Wednesday evening: the Fed is widely expected to announce a cutback to its $85 billion a month asset purchasing programme, which is liable to damage risk appetite. The extent of the damage is dependent on the size of the reduction: a small cutback could prove supportive to the Euro because the event has been priced in for so long, however, a larger taper could send the single currency spiraling lower as traders re-adjust their projections. 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 | | | | | | | | | 17 Sep | 09:30 | GBP | Consumer Price Index (YoY) (AUG) | 2.7% | | | 17 Sep | 10:00 | EUR | German ZEW Survey (Current Situation) (SEP) | 20.0 | | | 17 Sep | 10:00 | EUR | German ZEW Survey (Economic Sentiment) (SEP) | 45.0 | | | 18 Sep | 09:30 | GBP | Bank of England Minutes | | | | 18 Sep | 19:00 | USD | Fed Pace of MBS Purchase Program (SEP) | $40B | | | 18 Sep | 19:00 | USD | Fed Pace of Treasury Purchase Program (SEP) | $35B | | | 19 Sep | 09:30 | GBP | Retail Sales (YoY) (AUG) | 3.2% | | | 20 Sep | 15:00 | EUR | Euro-Zone Consumer Confidence (SEP A) | -14.5 | | | | | | | 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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