Pound Euro Exchange Rate Steady As Fears Grow Over France And Greece

Published: Monday, 5 November 2012 18:00 BST - Written by Minesh Chaudhari

STORY LINK Pound Euro Exchange Rate Steady As Fears Grow Over France And Greece

This week’s session started badly for Sterling with this morning’s release of the latest UK PMI Services sector survey, which revealed a larger than expected drop-off in growth levels in this key sector of the British economy last month. Analysts had been expecting a slight decrease from September’s 52.2 showing, however there was widespread surprise when the figure printed at 50.6. A PMI reading of less than 50 points to a contraction in activity levels, so December’s PMI Services data will now be closely-monitored.

The disappointing British services data has weighed heavily on the Pound, which has lost ground against nearly all of the other sixteen most-actively traded global currencies so far today.

Elsewhere, the euro has also endured a relatively poor day in the markets, following news that France’s government is likely to ignore calls from an independent report which it commissioned to introduce rapid cuts in government spending. The news has raised investors’ fears that, due to its profligate ways, France may be the next nation to go the way of Spain and Italy in encountering severe funding difficulties. Another vote in Greece’s parliament on a new set of proposed austerity measures later this week has reminded market participants that the Hellenic state is teetering on the edge of a deep fiscal abyss. This has hampered the single currency on the day today, meaning that in spite of the lack of support for Sterling, the GBP EUR exchange rate is still hovering around the 1.2500 level.

The next risk event of note comes during tonight’s Asian session, with the latest Reserve Bank of Australia policy announcement. If the RBA goes against the grain of the majority of analysts’ expectations and holds its key lending rate at 3.25%, then the GBP AUD exchange rate could well hurtle down towards the psychologically key 1.5000 level.

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