EUR/USD Rebounds, EUR/GBP Struggles After UK Construction PMI

Published: 4 Nov at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, USA, France, Germany, Italy,

While the Euro slumped to a six-week low against the US Dollar as last week’s disappointing Eurozone data led investors to speculate on the likelihood of the European Central Bank issuing a rate cut, the common currency was later able to stage an impressive rebound against its North American peer.

Although not all the news to emerge from the Eurozone over the last few hours has been positive (both French and Italian manufacturing PMI declined by more than expected) the fact that German manufacturing PMI exceeded forecasts while a Sentix sentiment gauge for the Eurozone increased boosted the European asset.

The common currency posted a modest gain against the US Dollar and advanced on the Yen for the first time in three days as the better-than-anticipated news lowered the odds of the ECB adjusting rates when it meets this week.

According to currency strategist Sebastien Galy, ‘In the short term, if we don’t get a decision from the ECB to cut rates, we’ll basically pull a bit higher. The ECB may be signalling a dovish message but not cutting rates at this meeting, but maybe at the next.’

Further Euro movement can be expected to occur over the next few days as German/Eurozone services PMI, Eurozone retail sales and German factory orders figures are published. Data from the UK and US will also be of interest.

The European Central Bank will deliver its rate decision on Thursday, but Friday’s non-farm payrolls report is likely to be the week’s main cause of market volatility.

If the data exceeds predictions and adds to the case for the Federal Reserve tapering stimulus before the end of the year the US Dollar could advance before the end of the week.

As it stands the Euro is trading against the Pound in the region of 0.8468 and against the US Dollar in the region of 1.3512.

In other currency news, the Pound posted widespread gains over the course of the European session as UK construction output surged unexpectedly.
As of Monday, 4th November 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1817, GBP USD exchange rate was 1.5971,

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