The Euro (EUR) exchange rate was under pressure against the Pound (GBP) after the European Commission revised its growth and inflation forecasts for the Eurozone and UK, against the US Dollar (USD) the Euro was able to strengthen as US trade balance data disappointed.
Earlier in the session, the Euro was firmer against the Pound after data out of the UK showed that activity in the nation’s construction sector slowed more than forecast in October.
The data compiled by Markit showed that the Purchasing Managers Index for the sector fell to a reading of 61.4 from the 64.2 in September. The drop was steeper than the 63.5 figure forecast by economists.
Against the US Dollar, the Euro and Pound had already managed to tick higher as concerns over oil prices and a bout of profit taking sent the ‘Greenback’ lower.
As the session progressed, the Euro found support from the release of better than expected monthly Producer Price data. The report released by Eurostat showed that PPI across the Eurozone edged higher by 0.2%, beating forecasts for a figure of 0.0%.
The big mover for the single currency came however from the European Commision, which announced that it had revised its forecasts for the Eurozone. The EC now believes that the region’s economy will grow by 0.8% this year, well below its spring forecast for 1.2% growth.
The commission also cut its prediction for next year by now citing that the economy will grow by 1.1% from its previous forecast of 1.7%. Weakness in France and Italy was the main cause for the cut in expectations.
The commission report also showed that inflation would remain well below the European Central Bank’s target rate of 2%.
‘The slowdown in Europe has occurred as the legacy of the global financial and economic crisis lingers. We see growth coming to a stop in Germany, protracted stagnation in France and contraction in Italy,’ said the director general of the commission’s economics department Marco Buti.
The European Commission also raised its forecasts for the UK. It now expects the nation’s GDP to expand by 3.1% this year and rise 2.7% in 2015, up from earlier predictions of 2.7% and 2.5%.
After the release of the report, the GBP/EUR exchange rate was hovering close to the 1.28 level.
Against the US Dollar, the Euro was able to hold onto earlier gains after economic data released by the Washington based Commerce Department showed that the USA’s trade deficit widened in September as exports fell to a five-month low. The disappointing figures raised concerns that slowing global demand could negatively affect US GDP in the final quarter of the year.
Euro Exchange Rate News:
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