Pound Euro Exchange Rate (GBP EUR) Breaks To New 9 ? Month Low, Negative Signs For Australia?s Housing Sector

Published: Monday, 14 January 2013 16:00 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate (GBP EUR) Breaks To New 9 ? Month Low, Negative Signs For Australia?s Housing Sector

This morning’s whole of eurozone Industrial Production data for November showed an annualised drop of some 3.7% in the region’s total factory output. The drop shows that the contraction in the level of goods and services coming out of Europe’s factories is picking up pace – October’s counterpart figure showed at -3.3%.

The ugly euro area figure once again raises fears that the severe austerity measures which the EU/ECB/IMF have imposed on several of the region’s peripheral states is beginning to reek a downward multiplier effect on activity on the rest of Europe. However, these concerns have, up to this point, failed to dampen the strongly positive momentum which the euro is currently enjoying against the Pound. This sent the Pound Euro exchange rate (currency : GBP EUR) down to a fresh 9 ½ month low.

There looks to be little in terms of positive risk events to support Sterling during the remainder of this week’s session. Tomorrow’s UK CPI inflation data would appear unlikely to show above the anticipated 2.7% level – a showing closer to the UK government’s 2.0% target would be likely to heap further pressure on the Pound. Meanwhile, Friday’s key British Retail Sales numbers for December, (traditionally the most closely-watched shop sales number of the year), have the potential to trigger further Sterling downside. With last week bringing the release of disappointing Christmas trading figures from major British retailers Sainsburys and Marks & Spencers, the Pound could end the week on a duff note once again.

Elsewhere, last night’s monthly Australian Home Loans data for November printed at a weaker than anticipated -0.5%, down from October’s 0.1% showing. Key indicators from Australia’s housing market in recent months have pointed to a cool-down. If this pattern is repeated throughout the remainder of 2013, then the ‘Aussie’ could begin to give back a portion of the gains which it has registered against Sterling since the Autumn of 2008.

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