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The Pound made a small advance against the Euro; but fell against the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate opened at 1.1413 and after a very choppy day’s trading, close at 1.1418. The sole piece of economic data released from the UK yesterday showed that the PMI services index for August fell; from 51.1 to 50.4; the sharpest slowdown since 2001; but with many analysts attributing the poor performance to the after-effects of last month’s riots, it could well prove to be a temporary drop.
There are no scheduled data releases from the UK today, leaving the currency open to news and events from around the world.
The Euro fell against the Dollar and the Pound yesterday with the currency coming under pressure mainly due to increased fears over the Euro region falling back into recession. A survey of the Euro-zone economy published yesterday by the research group Markit; showed that growth in economic activity across the Euro-zone fell to its lowest rate in almost two years, and also that the combined Euro-zone services and manufacturing PMI fell to 50.7 in August, with business optimism falling significantly in Germany, France, Spain and Italy.
This morning will see the release of the final reading of 2nd quarter Euro-zone GDP, and the Euro could yet face further pressure if there is any downward revision in the numbers. German factory order figures will also cross the wires later on today. With the nation being so heavily reliant on its manufacturing industry; the currency will surely be affected by any unwanted decline in the monthly or annual levels.
The US Dollar is continuing to benefit from uncertainty and debt woes in Europe, gaining across the board despite yesterday being a non-trading day in the US. With no economic data released due to the Labor Day holiday, the currency exchange market took direction from alternate factors from around the globe, and the EUR/USD continued its pullback, moving down from the morning’s open at 1.4141 to 1.4103 by the end of the UK trading day. The Dollar also moved significantly against the Pound, with the GBP/USD exchange rate falling to a 6-week low of 1.6105.
Today will see the release of Augusts ISM non-manufacturing figures from the US; with the market forecast for a slight decrease in the index level; but it may not have too much of a negative effect on the currency, with much larger event risks and sentiment shifts from around the globe.
This Daily Market Update is brought to you by The Market Team @ KBRFX – Exchange Rates & Foreign Currency Transfer specialists.
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