Pound to Euro (GBP/EUR) Exchange Rate Hits Near Term High On Services Data

Modified: Thursday, 5 September 2013 11:31 BST - Written by Toni Johnson

STORY LINK Pound to Euro (GBP/EUR) Exchange Rate Hits Near Term High On Services Data

The Pound stormed ahead against the euro during yesterday’s session, sending the GBP EUR exchange rate up to a fresh near-term high. However, these gains may prove ephemeral if ECB President Mario Draghi alludes to inflationary pressures returning to the eurozone economy later today.

The Pound euro exchange rate (GBP/EUR) is currently trading up by 0.14% at 1.1833 GBP/EUR. The euro Pound exchange rate is currently trading at 0.8451 (EUR/GBP).

Official figures published by the US Commerce Department yesterday afternoon revealed that the world’s leading economy has a widening trade deficit. The July numbers showed that recent changes in the nation’s automotive industry are having a detrimental effect on its import / export numbers; America is now buying in more cars from abroad than was previously the case and shipping out a lower number than during the pre-credit crunch era. July’s monthly Trade Gap of $39.1bn suggests that the US economy is beginning to suffer from an imbalance similar to that which the UK experienced during its rapid de-industrialisation of the 1980s.

Britain filled the void left by disused coal mines and steel works by boosting its services sector, with the financial sector leading the way. Yesterday’s highly encouraging PMI Services sector survey, which showed that activity levels in the UK’s combined tertiary industries were at their highest level since before 2007, suggests that the future prospects for UK PLC are brightening. The Pound registered healthy gains against all of the other major global currencies, with the exception of the high-yielding Australian and New Zealand Dollars as a consequence, sending the Pound euro exchange rate (GBP/EUR) up into the mid-1.1800s just before North America’s equities markets opened, while the Pound US Dollar exchange rate (GBP/USD) jumped top as high as 1.5648 on the day.

Looking ahead, today’s session will be dominated by central bank decisions from the eurozone and the UK. With leading indicators of inflationary pressures in mainland Europe increasing over the past four weeks, it seems highly possible that ECB President Mario Draghi will ease the recent dovish tone of his post-announcement press conference. If this proves to be the case, then expect GBP EUR to retrace back down towards the 1.1700 level once again.

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