Foreign Exchange Rates: GBP EUR Trades Lower, GBP USD Follows Suit

Modified: Thursday, 12 December 2013 09:17 BST - Written by David Woodsmith

STORY LINK Foreign Exchange Rates: GBP EUR Trades Lower, GBP USD Follows Suit

The euro powered forward against a lacklustre Pound Sterling during yesterday afternoon’s session, sending the GBP EUR exchange rate down to an intraday low of 1.1857. The move was partly attributable to a lack of solid support for the UK tender, but the main driver behind the shift lower was a renewed bout of support for the single currency.

The move in favour of the euro was fuelled by market rumours that European Union Finance Ministers are nearing an agreement on a eurozone-wide mechanism for bailing-out retail banks with balance sheet problems. The development followed all night talks between the eurogroup of FinMins which concluded yesterday morning. The proposed EU Single Resolution Mechanism would provide a heavily-funded pot of emergency funds to be used to rescue Europe’s failing banks.

This morning’s whole of eurozone October Industrial Production numbers are the next major risk event of note for GBP EUR. If they show at above the year-on-year 1.1% which analysts expect, then look for the GBP EUR exchange rate to head further South. In such a circumstance, the next level heading lower for GBP EUR comes at October’s 3 ½ month low of 1.1648.

Elsewhere, the highlight of this afternoon’s session comes in the US with the release of last month’s Advance Retail Sales data. The figure is expected to show an improvement from October’s showing of 0.4%. If it builds on last week’s positive American GDP and jobs data and prints above the anticipated 0.6% level, then expect the Pound US Dollar exchange rate (GBP/USD) to drift down to below the 1.6300 trading level which it made a downside move towards during the middle part of yesterday’s trading session. Weekly Initial Jobless Claims figures, also in the US, are due for publication at the same time as the November shop sales numbers, and are likely to provide Cable with further near-term direction.

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TAGS: American Dollar Forecasts Daily Currency Updates Euro Forecasts Eur Forecasts