Euro Rate Today - British Pound vs Euro and Sterling vs Dollar Pressured Lower after Weak UK Services Data

October 5, 2014 - Written by David Woodsmith

STORY LINK Euro Rate Today - British Pound vs Euro and Sterling vs Dollar Pressured Lower after Weak UK Services Data

The Pound to Euro (GBP EUR) exchange rate was trending lower last Friday after the release of worse than forecast UK Purchasing Managers Indexes (PMI).

Dovishness from the Bank of England (BoE) has also contributed to pressuring Sterling lower as officials vocalised their conflicting views in recent weeks.

In addition, Eurozone Retail Sales figures have jumped higher than economists had predicted in August, which may offer some support to the Single Currency.

Here we can see the latest conversion rates (updated 06/10/2014):

- The pound to australian dollar exchange rate is -0.64 per cent lower at 1.83096.
- The pound to euro exchange rate is -0.12 per cent lower at 1.27417.
- The pound to dollar exchange rate is +0.15 per cent higher at 1.59864.

Pound Fluctuates on BoE Rate Hike Timeframe

The Pound has been very sensitive to any commentary from the BoE in recent months.

The Sterling exchange rate was initially bolstered by hawkish BoE statements earlier in the year, resulting in five-year highs for the UK currency.

However, as the timeframe of interest rate hikes has been pushed further away and the BoE has expressed contradictory views, the Pound has tumbled.

In recent months the central bank has seen a divergence between its policymakers, with two out of nine voting in favour of interest rate hikes in the imminent future.

The difference of opinion saw the Pound rally and since then investors have hoped that the BoE will see a bigger split in the vote.

On Friday BoE officials are gathering to prepare for next week’s bank rate meeting, which may see a division among policy members for a third consecutive month.

However with seven of the nine Monetary Policy Committee board members currently wishing to keep interest rates at their present level, the doves are likely to outweigh the hawks. Economist Rob Wood commented: ‘We can be slightly more optimistic that the recovery will be sustained. And we can be slightly more optimistic about productivity growth. That gives a touch more weight to the doves. They are giving the steer that they don’t think interest rates will need to rise immediately.’
Policymakers will discuss recent UK fundamentals with the BoE meeting taking place on the 7th and 8th of October, with the result of the vote announced on the 9th.

Today's Euro Exchange Rate Lower as Eurozone Data Flops

Investors’ eyes turned to ECB President Mario Draghi yesterday as he commented on the central bank’s latest policy measures to try to boost economic expansion in the 18-nation area and drive up inflation.

Thursday saw the ECB President pledge his commitment to buying asset-backed securities (ABS) for a minimum of two years.

However, one hot topic amongst economists at the minute is if the ECB is likely to undertake a program of quantitative easing (QE). The ECB remains the only leading central bank to have resisted QE since the global financial crisis, but many industry experts believe that the only way to see positive results in the Eurozone will be through QE.

September’s final PMI ecostats saw the French Composite and Services measures revised down from their flash estimates both sliding further into contraction.

However, Germany’s figures were revised higher, giving some hope to the Eurozone. Germany’s Composite PMI rose to 54.1 from 54 while the Services index grew to 55.7 from 55.4.

Meanwhile, the Pound softened on the news that UK Services PMI has softened in September attaining only 58.7 index points, down from the previous 60.5. Moreover, Composite PMI also fell to 57.4 from 59.3. On a positive note, Eurozone Retail Sales figures expanded in August by 1.2% on the month, despite forecasts for only a 0.1% gain.

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