Better Than Expected Spanish GDP Data Could Send Pound Euro Exchange Rate Lower

Published: Tuesday, 30 October 2012 10:00 BST - Written by Frank Davies

STORY LINK Better Than Expected Spanish GDP Data Could Send Pound Euro Exchange Rate Lower

Today’s European session has begun with the release of a rare piece of stronger than anticipated data from struggling Spain. The Q3 GDP growth figures from the down-at-heel Iberian state showed a quarter-on-quarter dip in activity of 0.3% - hardly great news at first glance. However, the number was an improvement from Q2’s showing of -0.4% and better than the -0.4% which analysts had been expecting.

However, it has not been a case of good news all the way this morning for the single currency – the latest German unemployment data showed that the ranks of the jobless in Germany increased by 20,000 last month, against expectations of a 10,000 showing. Bad news for Germany is extremely bad news for the rest of Europe, so the release has the potential to reverse a portion of the euro’s recent gains.

Looking ahead to the remainder of today’s session, the stand out data release comes in the form of this afternoon’s US Consumer Confidence figure for October. Analysts are anticipating that the release will show that the Fed’s summertime announce of more Quantitative Easing for the US economy is continuing to improve the mood of economic participants, with a showing of 73.0 expected. Any reading of above 50 for such an index points to a majority of positive respondents, so an increase from September’s figure of 70.3 would be an encouraging result, to say the least. Such an outcome would hint that QE3 is having the desired effect in the States. Ironically, this could make future increases to QE less likely, providing support for the US Dollar and sending the GBP USD exchange rate back below the psychologically significant 1.6000 level. The pair is currently trading at 1.6057.

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 Daily Currency Updates Dollar Po Forecasts