Pound To Euro Exchange Rate Remains Dependent On Eurozone Debt Crisis

Published: Friday, 16 November 2012 09:00 BST - Written by Toni Johnson

STORY LINK Pound To Euro Exchange Rate Remains Dependent On Eurozone Debt Crisis

Yesterday represented a relatively quiet day on the foreign currency markets. The few noteworthy risk events told us very little that was not already known and ‘factored-in’ to pricing; the latest set of UK Retail Sales data came out relatively weak, meanwhile in the US, Initial Jobless Claims figures confirmed that the labour market of the world’s leading economy remains subdued and in the eurozone, Q3 GDP growth data showed that the region’s economy edged back into recession during the past 6 months.

If anything, today’s session provides even less in the way of data releases which might trigger any pronounced price action. The session is perhaps summed up by the fact that the key releases of note come this afternoon in the form of the latest US Industrial and Manufacturing Production figures, which are unlikely to cause much of a shift in the value of the Dollar unless they come out wildly above or below analysts’ expectations.

The key global currency pairs are therefore likely to trade in the tightly defined ranges which they have inhabited for some time. The GBP EUR exchange rate started out the week in the mid-1.2500s and briefly tested the high-1.2300s yesterday. The rapid rejection which followed the pair’s visit to its intraweek low yesterday suggests that a pronounced band of technical resistance in this region. It would therefore appear likely that GBP EUR will remain lodged in the 1.2400s today. The only factors which have the capability to alter this set-up would be an escalation of mainland European anti-austerity protests akin to those witnessed in the middle part of the week, or alternatively any hint that Europe’s struggling Southern states are beginning to creak under the pressure of supporting their relatively massive debt burdens. This ever-present danger has permanently loomed over the single currency over the past two years and appears unlikely to disappear for many years to come.

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TAGS: Daily Currency Updates Euro Forecasts Euro Pound Forecasts Pound Eu Forecasts