As last week's exchange rate markets came to a close, the Pound to Euro pair ended the FX trading week close to the best currency exchange levels recently seen for two years, certainly within 2014.
Despite the Bank Holiday, the Pound euro exchange rate made gains after economic data out of the single currency bloc came in below economist forecasts and further highlighted the weakness prevalent in the region.
Against the US Dollar, Sterling managed to tick higher on the back of downbeat New Home Sales data out of the world’s largest economy.
Due to a lack of domestic data releases midweek, the British Pound saw little in the way of movement. Movement was dependent on the data out of the USA and Eurozone.
The latest foreign exchange markets show the following levels at the week start (01/09/2014 09:20 GMT):
- The pound to euro exchange rate is 0.23 per cent higher at 1.26680.
- The pound to dollar exchange rate is 0.29 per cent higher at 1.66383.
- The euro to dollar exchange rate is 0.05 per cent higher at 1.31341.
- The dollar to pound exchange rate is 0.29 per cent lower at 0.60102.
Note: these are inter-bank forex rates to which margins are applied when sending money abroad - speak to a recommended foreign exchange provider to lock in the best exchange rates.
British Pound under pressure over Scottish Independence
Sentiment towards Sterling came under some pressure as the Scottish Independence Referendum draws closer and the rhetoric from the Yes and No campaigns heated up.
Business leaders in the UK wrote a letter telling voters that a Yes vote will harm business in Scotland, the No campaign countered with a similar letter from business leaders in support of Independence. The arguing between the two sides is set to increase as the vote draws nearer and the uncertainty is causing investors to be wary over Sterling.
The Pound Sterling to euro exchange rate advanced back above the key 1.26 level on Friday after a report showed that consumer confidence increased more-than-forecast in August. The GfK Consumer Confidence index increased to a reading of +1 in August from the -2 reading recorded in July.
Euro exchange rate complex under pressure ealy in the week
The Euro (EUR) exchange rate complex came under pressure against the majority of its most traded peers on Monday after economic data released in Germany, (the 18-member currency blocs largest economy) showed that business confidence declined for a fourth consecutive month.
Concerns over the stability of the French government were also thrown into question on Monday after three ministers quit over a bitter row over policy decisions in the second largest Eurozone economy. With a lack of domestic data, releases on Tuesday investors were looking ahead to Wednesday’s Consumer Confidence data and Business Confidence reports from Germany and France.
The Euro regained ground against several major peers as speculation increased that the European Central Bank will not introduce new monetary stimulus measures at next week’s policy meeting. Investors widely shrugged off the disappointing confidence reports from Germany and France.Expectations for the introduction of a quantitative easing programme lessened following comments by German Finance Minister Wolfgang Schaeuble.
The minister said that recent comments made by ECB President Mario Draghi had been ‘over-interpreted’. The currency is likely to give up yesterday’s gains if today’s plethora of data disappoint.
The Euro to Pound exchange rate is on course to make a seventh consecutive weekly decline, its worst run of losses in more than ten years on Friday as economists raise their bets that today’s Eurozone inflation data will show a further drop in consumer prices.
If the inflation figure falls, the Euro will decline steeply as investors raise their bets that the European Central Bank will have to introduce new monetary easing measures at next week’s policy meeting.