GBP to Euro Exchange Rate Down And Could Head Lower
The euro once gain registered gains against the Pound during yesterday’s session, sending the GBP/EUR exchange rate down into the lower half of the 1.2300s by the European equities close. The fundamentals suggests that a move to the upside would have been the most obvious outcome following some strong UK employment data and the release of figures which suggested that yesterday’s debt buyback by Greece was not as successful as had originally been thought.
Meanwhile, yesterday’s whole of Euro zone Industrial Production data for October printed at a disappointing -3.6% versus expectations of a showing of -2.4%. The tame showing raised fears that mainland Europe’s economy is heading for another recession, particularly in light of last week’s Euro zone GDP data which confirmed a slight contraction in economic activity in Euro land during the three months to the end of September.
On the other side of the Atlantic, the Federal Open Market Committee announced a slight alteration to its monetary policy targets last night. The US Central Bank stated that it will now maintain interest rates at their current ultra-low level until the overall level of US unemployment dips below 6.5%. The Dollar has remained under pressure since the Fed announcement and the GBP USD exchange rate currently stands at 1.6141.
On the FX market, GBP/USD has benefited from the weaker USD due to the FOMC effect, and remains supported by favourable labour market data released by the ONS earlier in the session. The jobless claims change unexpectedly fell by 3,000, prompting a fast-money move higher in the pair, taking out stops at 1.6135 on the way to a session high of 1.6149, but the rally was tempered by touted offers at 1.6150. Post-FOMC rate decision projections release, any aggressive USD weakening could bring Nov 1st highs into play at 1.6176, with Oct highs just beyond at 1.6178.
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