Strengthened Euro due to German PMI data

Yesterday saw the release of The German flash Purchasing Managers Index for October at 08:30am for October which sat at 56.6… well above the forecast figure of 54.7. The result was a strengthend Euro by nearly a cent against the pound taking GBP/EUR to €1.1256. The markets had closed from the previous days trading at €1.1351. The German PMI data suggests that the private sector is passing through a turbulent stage in the recovery process as manufacturing further adds some ground to the exceptional growth seen in the first half of this year. Growth in Germany continues to remain strong but the Eurozone as a whole is being dragged down by other countries such as France.

Retail Sales in the UK, also released yesterday, showed sales had fallen yet again in September, the second month in succession that they have experienced a decline. Sales were 0.2% lower than those figures previously released in August and the fall included sales in both clothes and fuel. Analysts expected a comparative figure to last year of 0.9% the actual number released was 0.5%. This took GBP/EUR to a new 6 ½ month low of €1.1230. This data comes after a number of retailers warned of weak trading conditions. A British Chamber of Commerce spokesman said “there was no need for undue pessimism” because the pace of annual retail growth was still faster than a year ago. Mervyn King had commented earlier this week that the “key role” for the BoE was to provide further stimulus when the economy was in need. The bank through QE has to date put £200bn into the British economy.

On Thursday morning GBP/USD opened at $1.5812 however in the US data showed the number of people in the US filing for first time claims showed a decline of 452,000 which was expected at 453,000 the previous months figure was 475,000. This caused the Dollar to strengthen slightly with GBP/USD at $1.5758.

Also in the US the Philadelphia Federal Reserve reported that’s its business activity index came in at 1.0 in October against a forecast of 0.5 showing a slight improvement after two previous months of contraction. The markets saw little reaction to this data with GBP/USD trading at $1.5765.

Tags:  euro, Exchange foreign, foreign exchange, France, German PMI data, Germany, Mervyn King, pound, sterling, UK, usd