The Euro to GBP exchange rate continues to trade below the 0.80 level, although the ‘Common Currency’ was able to eke out a modest gain against the Pound during European trading.
After UK reports failed to live up to expectations, the EUR/GBP exchange rate softened to a low of 0.7953.
Before the data was issued, economists had believed that UK Industrial and Manufacturing Output accelerated in May, with the former climbing by 0.3% and the latter advancing by 0.4% on a month-on-month basis Both measures of production actually declined.
Industrial production fell by 0.7% from April while manufacturing production dropped by 1.3%.
This bought the annual measures of production to 2.3% and 3.7% respectively.
The unexpectedly disappointing result has caused a fresh wave of Bank of England rate-hike-speculation and initially inspired significant Pound losses.
Economist Neil Prothero had this to say of the report; ‘That brings an end to a very strong run of data and serves as a reminder that manufacturers continue to face a number of headwinds, not least subdued external demand across Europe, which continues to weigh on export prospects. Monthly production data can be volatile and the dip in May contrasts with other positive surveys and healthy domestic order expectations. Despite the dip, manufacturing remains on track to expand for a fifth consecutive quarter’.
There was further bad news for the UK today as the National Federation of Independent Businesses published its Small Business Optimism report. Rather than advancing from 96.6 to 97.0 in June, as economists expected, the measure fell to 95.0 last month.
However, while the Euro to GBP exchange rate initially climbed after the data was released, the Pound went on to recover a more even footing as investors bet that today’s results won’t prevent the Bank of England from raising interest rates in the near future.
The Pound remains within touching distance of an over 20-month high against the Euro.
Sterling also recovered some of its losses against the US Dollar.
The EUR/USD exchange rate was 0.1% weaker for most of Tuesday’s local session despite the fact that investors are bracing themselves for the publication of potentially dovish minutes from the Federal Open Market Committee’s latest policy meeting.
If the minutes do reiterate the Fed’s commitment to leaving interest rates at record lows, the Euro could push higher against the US Dollar.
That being said, Euro losses could be incurred on Thursday if the European Central Bank’s monthly report intimates that a quantitative easing style stimulus programme could be adopted.
As it stands, and with UK growth data still to come, the Euro to GBP exchange rate is trading in the region of 0.7941.
Euro (EUR) Exchange Rates
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Currency, ,Currency,Rate ,
Euro,
Euro,
Euro,
Euro,
Euro,
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