ECB Report Sends Pound Euro Exchange Rate Higher (GBP/EUR)

March 13, 2014 - Written by Minesh Chaudhari

STORY LINK ECB Report Sends Pound Euro Exchange Rate Higher (GBP/EUR)

This morning’s European Central Bank monthly report could put pay to the recent improvement which the single currency has posted against Sterling. The closely-watched missive observed that the mainland European economy still has ‘a high degree of unutilised capacity’, hinting that the ECB still considers the risk of deflation in the region as a real one, in spite of comments to the contrary from the Bank’s President Mario Draghi last Thursday afternoon. The Pound euro exchange rate has edged higher during this morning’s session as a consequence, creeping up to as high as 1.1975 GBP/EUR earlier on.

Elsewhere, the Australian Dollar pushed ahead against Sterling during early trading today following the publication of stronger than anticipated domestic job creation numbers in the Antipodean state. The move, which sent the Pound Australian Dollar exchange rate down to close to the 1.8300 GBP/AUD threshold earlier, followed the closely-watched labour market numbers which revealed that almost 50,000 new jobs had been generated in the Australian economy last month. However, a generally ‘risk-off’ trading environment during today’s European equities session has seen investors move out of Aussie-denominated assets, culminating in a move up to 1.8476 for GBP/AUD a short time ago.

Another factor holding back the Australian Dollar, along with its fellow Commodity Dollars, on the day has been the release of significantly weaker than anticipated February Industrial Production and Retail Sales numbers, published in China earlier this morning. The release has erased a significant amount of the gains which the New Zealand Dollar made against Sterling following last night’s decision by the Reserve Bank of New Zealand to hike its Official Cash rate from 2.50% to 2.75%. The GBP/NZD exchange rate is currently tipping the scales at just above the 1.9500 level. The Aussie and Kiwi Dollars could enjoy renewed support tomorrow afternoon if this month’s Michigan Confidence survey beats analysts’ expectations of an 82.0 showing.

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