GBP/EUR Eyeing Out 1.17 Level As Currency Markets Like the Latest Eco-Stats From UK Economy
- The Pound to Euro exchange rate is trading 0.16 pct higher at 10:00 in London at 1.1664.
- The Euro to Pound exchange rate is therefore seen at 0.8575.
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JUST IN: Quarter-on-quarter Eurozone GDP comes in at +0.3 pct for the second quarter 2013, better than estimates for 0.2 pct growth. The Year-on-year decline came in at -0.7, better than expectations of -0.8 pct.
But, despite the good Eurozone GDP numbers the Pound Sterling to Euro exchange rate remains in the blue which tells us that, on balance, the UK's economic data has impressed the most today.
The British Pound: Employment picture improves again
The big event for Wednesday was always going to be the unemployment data release.
The unemployment Rate came in at 7.8 pct, forecast was for 7.8 pct, so on target.
UK jobless claims fell by 29,200 in July, analysts had only expected the claimant count to fall by 15k.
It was also shown that weekly wages up more than expected at 2.1% vs 2% expected. June Average Earnings excluding Bonus rises to 1.1%.
"Unemployment will fall soon. Increased GDP without unemployment lower means productivity is increasing," say Forex.com.
We also hear from the Bank of England who released their latest MPC Minutes.
The forward guidance policy, introduced by Mark Carney and assuming that the BoE would not hike rates from 0.5% until inflation falls below the 2.5% target in 18-24 months, was backed by eight MPC members.
Martin Weale was the only one to vote against “in order to register his preference for a time horizon for the first inflation knockout that was shorter than proposed.”
The Euro: German and French growth figures add to optimisim
Ahead of the UK employment data we note the Euro was initially well bid thanks to good GDP stats from Germany and France.
Ishaq Siddiqi at ETX Capital runs us through the latest events concerning the Eurozone's two largest economies:
"German and French growth figures ahead of the European market enthuse investors Wednesday morning. Q2 GDP figures out of Germany were much stronger than anticipated by the market, in at 0.7% on the quarter versus expectations of 0.6%.
"France’s Q2 GDP figure comes in at 0.5% on the quarter, much stronger than the 0.2% figure expected by the market.
"Both economies showing a solid upswing, particularly France [given how markets have worried about the government’s slow implementation of budget reforms] bodes well for a robust reading for the euro area as a whole, due at 0900 GMT.
"The euro zone GDP figure is expected to show the region exiting a recession, posting growth of 0.1% on the quarter but after today’s German and French readings, some in the market are reconsidering their forecasts in the event of a stronger turnout.
"Germany’s figure certainly suggests that the worse of the economic turmoil in the country is over and the region’s powerhouse is back on its feet.
"Music to the ears of Chancellor Angela Merkel who is fighting for her job at next month’s national elections.
"French President Francois Hollande will also welcome the French GDP figure as this outcome is the strongest quarterly expansion since the start of his Presidential term.
"With the full euro area reading due in the next few hours, attention shifts to how the periphery has performed during the quarter.
"Both Spanish and Italian GDP figures for the period are expected to show a contraction between 0.1% to 0.2%, an outcome that investors will still welcome given that economic conditions have deteriorated further."