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Pound Sterling Euro Exchange Rate GBP EUR Forecast Higher

October 1, 2015 - Written by John Cameron

It’s been a data heavy day in the global currency markets and FX insiders forecast that there could be more price action to come for the world’s leading tenders before the weekend market shutdown.

The euro (currency : EUR) took centre stage with two keynote data releases. The latest German unemployment data, published first thing this morning, showed that the overall level of joblessness in the Teutonic powerhouse economy has remained at 6.4% this month, but the job creation element of the numbers disappointed, pointing to a net decrease of some 2,000 workers.

September’s whole of Eurozone Consumer Price Index figures, published a little later this morning, also disappointed, revealing that the mainland European economy has slipped back into deflation. This development has increased the likelihood that the European Central Bank (ECB) will broaden and deepen the scope of its ongoing €65bn per calendar month Quantitative Easing programme. Such a move would be highly likely to further weaken the single currency; price action for the Pound Sterling euro exchange rate on the day today reflected this feeling – the pair had changed hands in the lower part of the 1.3400s in early trade before touching an intraday high of 1.3584.

Elsewhere, there was also bad news for the Pound Sterling (currency : GBP) following the release of the final version of the UK’s Q2 Gross Domestic Product data. Earlier versions of the figure had pointed to an expansion of 2.6% in domestic economic activity over the twelve months to the end of June, so the downgrading of this figure to a year-on-year 2.4% represented bad news for Sterling.

Meanwhile, on the other side of the Atlantic, this afternoon’s private sector US jobs data pointed to a better than anticipated level of job creation in the States. If Friday’s US Non-Farm Payrolls data, due out on Friday afternoon, backs this up, then expect the Pound Sterling US Dollar exchange rate to drop back into the 1.4000s in anticipation of a US interest rate increase this side of Christmas. However, the latest official Chinese government survey of the nation’s manufacturing sector, out early tomorrow morning, has the potential to put paid to such a move from the Federal Reserve.

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