The Pound Euro exchange rate appreciated roughly a cent over the past week as concerns over Europe’s energy crisis and some lacklustre EUR economic releases weakened the appeal of the single currency.
Euro dented by soaring gas prices
The Euro was met by some notable selling pressure this week, as EUR investors grew increasingly unnerved by Europe’s energy crisis.
This came to ahead on Tuesday as natural gas prices struck a record high, exacerbating concerns over potential energy price increases.
Compounding this EUR sell off was a stronger US Dollar as well as a weak services PMI print.
The second half of the week then saw the Euro extend its losses on the back of some lacklustre German industrial data, with factory orders and industrial production both plummeting sharply in August, raising concerns over the Eurozone’s largest economy.
The Pound, meanwhile, enjoyed strong support through the first half of the week as concerns over the UK’s fuel shortages began to ease, part in thanks to the deployment of 100 military drivers to help supplies reach the hardest hit areas.
This upside in Sterling was then supported by the UK’s latest services PMI, after September’s finalised figures were revised higher to report a surprise expansion in service sector activity.
After stalling in mid-week trade as UK businesses warned about increases consumer prices in the lead up to Christmas, the Pound then extended its gains through the end of the week amidst an upbeat market mood.
Deterioration in German economic sentiment to extend the Euro’s losses?
Looking ahead to the start of next week’s session, the focus is likely to be on the publication of the latest ZEW survey from Germany.
This is expected to report than economic sentiment in the Eurozone’s largest economy continued to deteriorate this month, potentially driving the Euro lower.
Meanwhile, GBP investors will be keeping a close eye on the UK’s latest jobs report. Whilst August’s figures are expected to report unemployment held at 4.6% and wage growth remained robust, any upside in the Pound could be tempered by fears that the end of the UK’s furlough scheme last month will have driven a sharp rise in the jobless rate.
Also of note will be the UK’s latest monthly GDP figures. Will weak economic growth in August also weigh on Sterling sentiment?
If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers.
