Pound Euro Exchange Rate Slumps To New 15 Month Low Following Revised US Jobs Data

February 4, 2013 - Written by Tim Boyer

STORY LINK Pound Euro Exchange Rate Slumps To New 15 Month Low Following Revised US Jobs Data

Global shares soared and the Pound Sterling slumped as last week’s session drew to a close. It was clear what had caused the surge in global appetite for risk - positive US employment data, released at the start of the North American trading day on Friday, which sent the benchmark Dow Jones Industrial Average spiralling to its highest level for over five years.

However, the pronounced selling pressure on the Pound, which saw the Sterling Euro exchange rate (currency : GBP EUR) collapse to its lowest level since 1st November, 2011, was harder to explain. Lingering concerns that the UK might be about to relinquish its highly-values AAA credit rating played a part. But there would appear to be more to the move lower than simple Sterling weakness.

The euro US Dollar exchange rate (currency : EUR USD) is, by a long chalk, the most actively-traded of the world’s numerous currency pairs. The ‘risk-on’ trading environment which Friday’s upward revision to November and December’s US Non-Farm Payrolls figure triggered, caused a widespread shift out of the safe-haven of the US Treasury Bill, heaping pressure on the ‘Buck’. The announcement that 127,000 more jobs than had previously been estimated had been generated in the world’s leading economy at the end of last year sent the EUR USD exchange rate spiralling to its highest level for some 15 months.

Due to the highly liquid and fast-moving nature of the global currency markets, the gains for the euro in the world’s major pair (EUR USD) were reflected in similar gains for the single currency against the Pound. Sterling was trading in the 1.2300s against the euro as recently as Monday 7th January. The dramatic slump which followed saw the pair lose almost 9c during the subsequent four weeks. An argument now exists that the downside shift for GBP EUR has been overdone. Investors will be closely monitoring price action fro the pair today for any clues that the downtrend for GBP EUR has now been exhausted.

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: Daily Currency Updates Dollar Pound Forecasts Euro Forecasts Euro P Forecasts