Pound to Euro, US Dollar exchange rate: The Pound to Euro exchange rate improved by around 0.6 cents

The Pound to Euro exchange rate improved by around 0.6 cents throughout the day yesterday as Sterling benefitted from the UK economy's surprisingly resilient Service sector results. The Pound to Euro exchange rate improved by around 0.6 cents throughout the day yesterday as Sterling benefitted from the UK economy’s surprisingly resilient Service sector results.

Headlines

Sterling’s Secret* Service sector – surprise release supports GBP.
UK Construction PMI falls – demand wanes and stock can’t be sold.
Weak US Manufacturing data – spurs QE3 bets.
RBA leave interest rates unchanged – AUD support limited.

Sterling

It was a tale of two PMI’s yesterday for the United Kingdom as the Service sector excelled and the Construction sector disappointed. A premature release of the UK Services PMI for August, which showed an improvement from 51.0 to an impressive 53.7, gave the Pound a massive boost yesterday as it further depleted the chances of a move towards more quantitative easing from the Bank of England.

The unexpectedly strong Service sector figures made up for the day’s scheduled release: the UK Construction PMI, which fell into a slight contraction. The Construction index fell from 50.0 to 49.0 in August, as new orders fell at the fastest pace for over 3 years, which damaged sentiment towards Sterling. However with the probability of further monetary easing, or an interest rate modification, appearing to decrease in the wake of the Service sector figures; yesterday was a broadly positive day for the Pound.

Euro

Yesterday the single currency was pretty much unmoved on Moody’s decision to cut the credit rating outlook of the EU from stable to negative in response to growing pressures in the European Union’s four largest contributing economies: Germany, France, the Netherlands, and the UK. The lack of market reaction reflects a recent distrust in the ratings agencies and has come to be expected.

The Pound to Euro exchange rate improved by around 0.6 cents throughout the day yesterday as Sterling benefitted from the UK economy’s surprisingly resilient Service sector results.

The Euro’s slight slump could also be down to a growing number of economists who feel that even if the European Central Bank do embark on a bond-buying programme it will not be enough to claim back lost confidence. The notion that, without improved growth measures or ‘unlimited’ support from the Central Bank, yields will continue to rise in the periphery despite ECB bond intervention was best summed up by Lombard Street Research who commented that: “European policy remains M.A.D – Mutually Assured Destruction.”

US Dollar

Sterling rose to a daily-high of 1.5910 yesterday afternoon but faced stiff resistance around August 23rd’s 3-month high. The Pound’s performance came courtesy of some disappointing economic data releases in the United States.

The US Manufacturing PMI contracted for the third consecutive month as New Orders fell and Inventories rose – indicating that companies are inadvertently building up stockpiles as they find it harder to make sales. The number of new workers also decreased, to a near-3-year low, which painted a rather bleak picture of the US economy. Subsequently the Pound was able to appreciate against the ‘Greenback’ as the weak figures fanned the flames of QE3 bets.

Canadian Dollar

The Pound slipped by an ever-so-slight 0.2 cents against the Canadian Dollar yesterday, despite weak US Manufacturing figures reflecting poorly on the health of the Canadian economy’s largest, and most lucrative, trade partner.

Later on today the Bank of Canada’s Interest Rate Decision is expected to see Governor Mark Carney leave rates unchanged and could bolster sentiment surrounding the ‘Lonnie’ if the BoC strike a particularly hawkish tone.

Australian Dollar

Yesterday morning the Australian Dollar was treated to a pleasant surprise as the Reserve Bank of Australia decided to maintain the current interest rate at 3.5% and spoke with encouraging words in reference to the Chinese economy. However, the Pound’s rebound against the ‘Aussie’, which started on August 7th, continued throughout the afternoon as Service sector strength in the UK boosted the appeal of the Pound. The Pound to Australian Dollar exchange rate improved by a modest 0.25 cents throughout the day.

New Zealand Dollar

Sterling rallied by as much as 1-cent yesterday against the New Zealand Dollar before consolidating just under 2.0000 at 1.9990. It seems that the current upward trend in GBP/NZD was strong enough to resist growing QE3 bets in the US – which could potentially induce ‘Kiwi’ Dollar strength as it could increase investors’ appetite for risk. The Pound was also supported by the secret* Service sector release.

* Secret in that it was scheduled to be released today at 09:28 but was accidentally published on Reuters during the afternoon yesterday.

Data Released Today

02:30 AUD Gross Domestic Product (QoQ) (2Q)

09:00 EUR Euro-Zone Purchasing Manager Index Services (AUG F)

10:00 EUR Euro-Zone Retail Sales (YoY) (JUL)

14:00 CAD Bank of Canada Rate Decision (SEP 5)

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  3. Pound to Euro, US Dollar exchange rate: The Pound declined by around 0.5 cents against the Euro
  4. Pound to Euro, US Dollar exchange rate: The Pound lost out on 0.4 cents against the US Dollar
  5. The Pound to Dollar rate improved from 1.550 in the morning

Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/oTVNsmkiJQg/

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