Pound To Euro Exchange Rate Dips On ECB Bond Buying Hints

Published: Wednesday, 29 August 2012 09:00 BST - Written by Frank Davies

STORY LINK Pound To Euro Exchange Rate Dips On ECB Bond Buying Hints

Yesterday’s afternoon session saw the release of the latest edition of the closely-watched US Consumer Confidence survey and it made for interesting reading. The data revealed that consumer sentiment in the world’s leading economy has contracted by a significant amount this month. The survey showed at 60.6, significantly down from July’s print of 65.4. The drop-off of almost 5 points was the largest fall since October 2011. The release will catch the eye of institutional investors due to the effect which is likely to have on appetite for risk. Recent US data releases have hinted that America’s economy may be on an upward trajectory, with the latest US Non-Farm Payroll data thrashing expectations. However, yesterday’s number shows that all is far from well with American workers, with job insecurity remaining high and access to credit still severely restricted. The market’s reaction to the survey was slightly surprising, with the GBP USD exchange rate heading northwards following the release to trade into the 1.5830s. However, as is often the case with US data, the true market reaction may only set in once short-term traders who were betting on the release have cleared out of the market. Today’s session may not be such a positive one for Cable.

Elsewhere, the euro was given a fillip yesterday as European Council President Herman Van Rumpuy stated that the European Central Bank stands ready to release details of its bond-buying plan. Van Rumpuy was speaking after meeting Spanish Prime Minister Mariano Rajoy in Madrid. The EC President’s words of praise for Spain’s deficit reduction plan helped add to the veneer of accord which currently coats the eurozone debt crisis. The statement pushed the single currency stronger against both the US Dollar and the Pound, with the GBP EUR exchange rate trading down towards the mid-1.2500s by the middle part of yesterday’s European session.

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