Pound Euro (GBP/EUR) Exchange Rate Shifts Higher, Sterling Rand Exchange Rate Strikes 5 Year High

November 6, 2013 - Written by Frank Davies

STORY LINK Pound Euro (GBP/EUR) Exchange Rate Shifts Higher, Sterling Rand Exchange Rate Strikes 5 Year High

The major loser during yesterday’s session was the Euro (currency:EUR). The single currency slipped 0.80% against a go-ahead Sterling on the day, while the EUR USD exchange rate dropped by 0.30% and ended the day changing hands down in the 1.3400s.

The Euro US Dollar exchange rate (EUR/USD) is currently trading down by 0.31% at 1.3471 EUR/USD. The US Dollar to Euro exchange rate is currently trading at 0.7423 USD/EUR.

The move out of euro-denominated assets was driven by comments contained in the latest European Commission report on the state of the eurozone economy. Although the EC missive noted ‘signs of hope’ for a continued recovery in mainland Europe, these positive noises were tempered by a significant reduction to the EC’s forecast for 2014 GDP growth in the region as a whole.

The European Commission now predicts that GDP will increase by a barely-noticeable 1.1% next year. Previous estimates from the EC forecast annualised growth levels of 1.4%, so the downward adjustment came as a pronounced blow to the future prospects of the single currency. A visit to last month’s 10-month high at 1.2002 now appears a distinct near-term possibility for the Pound euro exchange rate (GB/EUR).

Elsewhere, the Sterling Rand exchange rate (GBP/ZAR) sprang to a new 5 year high in the mid-16.00s during yesterday’s trading. The sharp move forward for the pair was partly driven by strong UK services sector data, published yesterday afternoon. Another major contributory factor behind the break higher came in the form of fresh labour market tensions in South Africa where 7,000 platinum miners remain on strike. The upshot took GBP ZAR to its highest level since the height of the global financial crisis when leading investment bank Lehman Brothers went bust during the Autumn of 2008. It would appear that further upside can not be ruled out for the pair moving forward.

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