Euro Rate Today: Athens Riots & Gloomy GDP Forecast From Bank Of Spain Send GBP EUR Exchange Rate Higher

Modified: Wednesday, 26 September 2012 20:08 BST - Written by John Cameron

STORY LINK Euro Rate Today: Athens Riots & Gloomy GDP Forecast From Bank Of Spain Send GBP EUR Exchange Rate Higher

The eurozone gave a good impression of being the poor relation of the world economy during yesterday’s session - as the protests in Greece and Spain turned violent, global stock markets plummeted.

European stock markets summed up the mood in the camp by haemorrhaging support thanks to escalating fears regarding the depth of Spain’s economic problems. Subsequent violent protests in Athens added to concerns that the eurozone's socio-economic compact is beginning to unravel. Spain’s benchmark stock market, the IBEX closed down by nearly 4% on the day, following a doom-laden prediction by the country’s central bank that the economic slowdown which the debt-ridden Iberian state is experiencing is beginning to accelerate.

Ugly scenes of anti-austerity protestors throwing petrol bombs at riot police, who responded in kind by firing tear gas back at the protestors, added to the negativity which is fast enveloping the euroland. The GBP EUR exchange rate made some limited gains on the day, but remained below the key 1.2600 psychological level. This was perhaps a surprise, given events in mainland Europe. Further upside may be in store for the pair during today’s session.

Meanwhile, on the other side of the Atlantic, yesterday’s afternoon session brought the release of a disappointing set of New Homes Sales figures for August showed a surprise dip from July’s showing of 374,000. Analysts had been anticipating an increase to 380,000, so the release served to disappoint market participants, triggering further downside pressure in global stock markets. The figure was particularly disappointing in light of Tuesday’s strong Case-Shiller housing data. The return of ‘risk-off’ trading on the day saw the GBP USD exchange rate pull back from its recent 13-month high to trade into the low-1.61’s by the middle part of Europe’s afternoon session. Cable remains tentatively poised and the rapid forward move of recent months, which was accelerated by the Federal Reserve’s announcement of further QE earlier this month, looks like it may have run out of momentum.

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