As the week ends the Euro to Pound Sterling (EUR/GBP) exchange rate was trading higher after European Central Bank President Mario Draghi eased some of the concerns over the health of the Eurozone economy.
Against the US Dollar (USD), the Euro was weaker as demand for safe haven assets bolstered demand for the American currency.
Concerns over the global economy reduced demand for riskier assets and increased sentiment towards safe havens such as the Japanese Yen, Swiss Franc and US Dollar.
The Pound weakened after economic data showed that exports fell and activity in the UK’s Construction sector dropped steeply in August, adding to worries that the nation’s economy is slowing down and reducing the likelihood for the Bank of England to raise interest rates.
According to the Office for National Statistics (ONS), construction activity fell by 3.9% on a monthly basis and dropped at an annual rate for the first time since May 2013. Confusingly the data contrasts with last week’s Markit’s Construction PMI report, which showed that the sector grew at one of the fastest rates on record in September.
“Whether we trust the numbers or not, it is what it is and this will affect GDP, Depending on the scale of the bounce next month, this could subtract around 0.1% point from overall GDP growth,’ said Alan Clarke, an economist at Scotiabank.
Draghi Comments Support Euro
The Euro made gains against Sterling after ECB President Mario Draghi reaffirmed the central bank’s commitment to lift inflation from its current excessively low level by introducing additional monetary easing measures and warned that there will be no recovery unless the regions governments press on without reforms.
‘We are ready to alter the size and/or the composition of our unconventional interventions, and, therefore, of our balance sheet, as required. We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level, and we will do exactly that,’ Draghi said at the Brookings Institution in Washington DC.
Market sentiment came under further pressure amid growing concerns over the global economy after the International Monetary Fund cut its global economic growth forecasts for the third time this year on Tuesday and warned that the recovery remains weak and uneven.
The US Dollar strengthened as it continued to find support from Thursday’s stronger than forecast Jobless Claims data.
Euro Exchange Rate News:
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