Pound Euro Exchange Rate Gains On Weak Eurozone PMI Survey

Modified: Wednesday, 24 October 2012 15:20 BST - Written by Tim Boyer

STORY LINK Pound Euro Exchange Rate Gains On Weak Eurozone PMI Survey

Analysts were expecting this morning’s whole of eurozone Composite Purchasing Managers Index survey to show an increase from last month’s showing of 46.1. It therefore came as a significant blow to the euro when the latest survey of business activity in the region showed a surprise drop to 45.8 – this is the fastest rate of contraction which European businesses have experienced since the early part of 2009. The worrying news has caused investors to shift out of euro-denominated holdings on the day, sending the GBP EUR exchange rate back up as high as 1.2380.

Elsewhere, the Australian Dollar has been well supported during today’s session thanks to last night’s Australian Consumer Price Index inflation data for Q3 which printed at an annualised 2.0%, up from Q2’s showing of 1.6%. The figure shows that persistent price rises are far from under control in Australia’s economy, meaning that the Reserve Bank of Australia’s monetary policy committee may decide that another interest rate cut next month may be too risky because of the further inflationary pressures which it would illicit. Investors scrambled to adjust their positions following the inflation release, causing a near-term strengthening of the ‘Aussie’ which took the GBP AUD exchange rate down to 1.5446 on the day.

The Australian Dollar is the only major currency which the Pound has lost ground against today. Sterling has been well-supported on the day in anticipation of tomorrow morning’s UK GDP data for Q3. Expectations are high for the release – analysts are pricing-in a healthy quarterly increase of 0.6% in the three months to the end of September. However, caution is advisable as the old market adage ‘buy on the rumour, sell on the news’ still holds true – anything less than a 0.6% showing tomorrow will be likely to send the Pound sharply lower.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts