Pound Euro Exchange Rate Slips Today as German Data Sends GBP/EUR Lower

Modified: Monday, 21 October 2013 15:47 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Slips Today as German Data Sends GBP/EUR Lower

One of America’s pre-eminent former policymakers has weighed into the debt debate in the last 24hrs, causing further downside on the Greenback. Meanwhile, the Pound euro exchange rate (GBP/EUR) has lost ground on the day thanks to data from Germany.

The Pound to Euro exchange rate (GBP/EUR) is currently trading down by 0.03% at 1.1816 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8463 EUR/GBP.

As this week’s session in the currency markets gets underway, interest in one ongoing situation fails to dissipate – the US debt ceiling debate. Widely-respected former Federal Reserve Chairman Alan Greenspan, who was at the helm of the world’s premier central bank for some nineteen years, described the prospect of a repeat of this month’s Democrat / Republican debt row as ‘perfectly conceivable’ moving forward. Greenspan’s words piled the pressure on the Buck, sending the Pound US Dollar exchange rate (GBP/USD) up to 1.6181 earlier.

If Greenspan is correct in his assertion that the standoff between President Obama’s party and the Tea Party element of the Republican Party has not yet been put to bed, then the QE-driven share rally of 2012-13 could be set to stall. This would be likely to have a negative effect on the Commodity Dollars, potentially sending the Pound Australian Dollar (GBP AUD), Pound New Zealand Dollar (GBP/NZD) and Pound Canadian Dollar (GBP/CAD) exchange rates higher once more.

The US Dollar is expected to receive further direction tomorrow afternoon when September’s US Non-Farm Payrolls unemployment numbers are published. The key jobs numbers were severely delayed due to the partial US government shutdown which came as a consequence of the debt row in the States. Analysts are anticipating that the number will reveal that 180,000 new jobs were generated last month in the States. A figure of significantly higher than this is likely to trigger renewed support for the Dollar as investors price-in a higher percentage chance that the Federal Reserve will trim its Quantitative Easing scheme before Christmas.

Elsewhere, this morning’s German Producer Price data came out higher than anticipated, suggesting that a rate cut by the European Central Bank is unlikely in the near-term. The release triggered some limited support for the euro, but the single currency may enjoy further gains as the week progresses.

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