On Thursday, the EUR/GBP exchange rate weakened after Eurozone data came in below economist forecasts, raising concerns over the health of the regions economy.
The Euro to Pound (EUR/GBP) exchange rate edged lower to move away from a one-month on Wednesday as mixed Eurozone data weighed and the latest BoE minutes showed that more UK policy makers than forecast voted in favour of increasing interest rates.
Early in the session, the Euro looked set to make further gains against the weakened Pound as data released by the European Central Bank (ECB) showed that the 18-member currency bloc’s current account surplus widened strongly in September.
According to the report the regions current account balance made a surplus of €30.0 billion in September, up from August’s upwardly revised figure of €22.8 billion. The figure smashed economist expectations for a figure of €9.4 billion.
The surplus widened due to an increase in the surplus of goods and services. For the 12 months to September, the surplus was 2.5 per cent of the Eurozone’s Gross domestic product (GDP).
After the release of the current account data, came the publication of the minutes for the Bank of England’s November policy meeting. The minutes offered some support to the Pound as they showed that policy makers remained divided as to when to increase interest rates.
The minutes showed that policy makers Ian McCafferty and Martin Weale voted for a fourth consecutive month to increase interest rates to 0.75%.
The Pound firmed as economists had been expecting an 8-1 or 9-0 vote in favour of leaving rates unchanged at the record low level of 0.5%.
‘The inflation report cited the risks to the UK economy and that supporting inflation is still the top priority. The market may have priced more MPC members voting against an interest rate rise this morning, but the unchanged vote figures bode well for Sterling,’ said a currency analyst.
The Euro then gave up more ground to ease away from Tuesday’s one-month high after data showed that construction output across the Eurozone fell sharply in September. Activity fell from -1.5% to -1.8%, a figure that was far worse than the figure forecast by economists.
The sharp decline countered some of the positivity created by yesterday’s strong ZEW sentiment data.
Thursday promises to be a busy day for the EUR/GBP exchange rate as a wealth of data is due to be published from the Eurozone and the latest retail sales data is due out of the UK.
Of particular interest to traders will be Germany and France’s PMI reports.
Euro Exchange Rate News:
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