GBP to Euro Exchange Rate Blips Higher On Record Eurozone Unemployment Figure

Modified: Wednesday, 31 October 2012 14:03 BST - Written by David Woodsmith

STORY LINK GBP to Euro Exchange Rate Blips Higher On Record Eurozone Unemployment Figure

This morning’s session has brought more worrying data releases for the eurozone, as evidence mounts that the stringent austerity measures across the region’s most debt-strapped states are having a severe effect on the bloc’s real economies. Perhaps the most problematic state of all is Greece – a fact which was underlined by today’s release of Greece’s budget for next year. The document revealed that the country’s policymakers expect the domestic recession top worsen before it gets better, with next year’s GDP forecast now predicting that economic activity in the debt-addled state will contract by 4.5% against previous estimates of a -3.8% showing.

Negative sentiment towards the single currency was accentuated when this morning’s whole of eurozone unemployment data showed that a record number of workers are now without a job in the euroland. A staggering total of 18.49m eurozone residents are now without work; this equates to 11.6% of the region’s population, up from the previous reading of 11.5%.

The GBP EUR exchange rate headed upwards on these releases to touch 1.2420 earlier, before dropping back. The fact that such dire data releases do not now seem to cause a massive spike in the Pound to euro exchange rate is symptomatic of how much economic problems in Europe are now ‘priced-in’ to investors’ thinking. It also reveals that sentiment towards Sterling remains subdued in spite of last Thursday’s UK GDP growth data.

Elsewhere, this afternoon’s Canadian annualised GDP growth data for August showed at 1.2% versus the expected 1.7% - down from July’s showing of 1.9%. The number may well serve to put a semi-permanent stop to market speculation that the Bank of Canada is set to raise domestic interest rates. The release has predictably hurt the Canadian Dollar, sending the GBP CAD exchange rate up to 1.6132.

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