Pound To Euro Exchange Rate (GBP/EUR) Steady Despite Co-OP Credit Downgrade

Published: Friday, 10 May 2013 14:00 BST - Written by David Woodsmith

STORY LINK Pound To Euro Exchange Rate (GBP/EUR) Steady Despite Co-OP Credit Downgrade

Poor UK data releases marred this morning’s session for the Pound Sterling. A weaker than anticipated print for the latest British Construction Output data ensured that the Pound started the session under pressure. The key gauge of activity in Britain’s building sector showed a year-on-year drop off in activity of a greater than anticipated 7.4%, suggesting that demand for housing remains subdued in the UK.

March’s UK Trade Balance data, released at the same time, also disappointed. The figure showed that the UK’s trade gap the month before last stood at £3.13bn – somewhat worse than analysts had been anticipating. It appears that the UK economy’s ongoing lacklustre performance in the Manufacturing / Industrial sectors is continuing to harm its import / export situation.

Meanwhile, there was bad news for Britain’s retail banking sector earlier today when leading credit ratings agency Moody’s announced that it was downgrading the UK-based Co-Op Bank’s debt rating to junk status. The action raised the spectre of the funding difficulties which caused a run on another British financial institution, Northern Rock, shortly after the advent of the credit crisis in 2008. The Pound has managed to hold its own in the markets today in spite of the raft of negative news from the UK – the Pound to euro exchange rate (currency : GBP/EUR) has held above the 1.1800 level for the whole of today’s session.

Elsewhere, perhaps the most significant piece of price action on the day in the global currency markets has seen the US Dollar to Japanese Yen exchange rate (currency : USD/JPY) break through the psychologically-key 100.00 level for the first time since the first half of 2009. The move has a lot more to do with market movement for the Yen rather than for the Greenback and bears testimony to the concerted effort by the Bank of Japan to weaken the Yen over the past six months. Japan’s policymakers believe that a weaker domestic currency is a vital requirement for increasing activity levels in the industrial sector of Asia’s second largest economy. It is unlikely that the recent bout of Yen weakness has run its course yet.

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: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts