GBP EUR Exchange Rate Rises On UK Shop Sales Data

Published: Thursday, 17 October 2013 16:00 BST - Written by James Fuller

STORY LINK GBP EUR Exchange Rate Rises On UK Shop Sales Data

Sterling has registered good gains on the day following a positive UK data release. Meanwhile, the US Dollar has incurred losses on the session in spite of last night’s debt deal.

The Pound to Euro exchange rate (GBP/EUR) is currently trading up by 0.14% at 1.1809 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8468 EUR/GBP.
A potentially catastrophic US debt default has been averted thanks to last night’s vote in favour of an extension to America’s debt ceiling by Democrat and Republican policymakers. However, in an unexpected development, the US Dollar has lost ground against Sterling on the day today, sending the Pound Dollar exchange rate (currency : GBP USD) up into the 1.6100s this morning.

The reasons behind the shift out of Dollar-denominated assets are two-fold. Firstly, now that the storm has passed, investors have been left to contemplate the massively detrimental effects which the 16-day partial government shutdown is likely to have had on the US economy. Leading analysts predicted before the down-tools began that a 3 week shutdown could knock up to 0.9% off the US Q4 GDP figure, so the lay-off of almost two and a half weeks is likely to seriously effect levels of economic activity in the States.

The second factor behind the Greenback’s disappointing performance on the day is the implied effect which the shutdown will have on the Federal Reserve’s future policy decisions. With the attendant dip in GDP which the widespread enforced leave has had on the US economy, the Fed now appears highly unlikely to trim its $85bn per month Quantitative Easing programme before the turn of the year. The Buck has suffered as a consequence.

Elsewhere, Sterling has enjoyed a strong day in the markets, gaining ground against most of the other sixteen most-actively traded global currencies including the euro. The move in favour of Sterling-denominated assets has sent the Pound euro exchange rate (GBP/EUR) up to 1.1813 on the day. Positive investor sentiment towards the Pound has been driven by this morning’s stronger than anticipated UK Retail Sales data which showed a year-on-year increase of 2.8% in British shop sales.

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