British GBP/EUR ALERT: GBP/EUR in fresh bounce as UK industry comes to the party

At 09:40 we see the British pound to euro exchange rate is 0.1 pct higher at 1.1922.

The euro sterling rate is thus quoted at 0.8388.

NB: All quotes here are taken from the spot market. Your bank will subtract a spread at their discretion when passing on a retail rate. Note that an independent FX provider will guarantee to undercut your bank's offer, thus delivering up to 5% more FX. Learn more here.

Strong data keeps the buyers behind GBP

We have seen the UK currency boosted over the past few days by some good PMI data releases; the question today was whether data from the ONS would back the story of a robust UK economic recovery.

Data from the industrial sector has today confirmed this to be the case; a situation that has only added to bullish sentiment on GBP.

The ONS reports:

Industrial Production (YoY) (Sep): +2.2%, expected: +1.8%.
Industrial Production (MoM) (Sep): +0.9%, expected: +0.5%
Manufacturing Production (MoM) (Sep): +1.2%, expected: +1.1%.
Manufacturing Production (YoY) (Sep): +0.8%, expected: +0.7%.

The next big event on the horizon for the pound to euro exchange rate is the release of Eurozone retail sales data at 1000 GMT.

The market expects a fall of 0.4% fro Sept, could take shine off

Over the past 24 hours sterling was helped against the euro as new forecasts from the European Commission were released.

They showed that no growth is likely in the EU in 2013 and an expansion of 1.4% is now expected in 2014.

This is actually an upgrade from previous estimates despite the belief that the unemployment situation will only improve to 11.8% by 2015; it currently sits at 12.2%.

In the near-term, inflation is to remain weak however; another reminder ahead of the much-watched ECB decision due on Thursday.

Thursday’s meeting is now almost unanimously believed to herald no rate movement from the ECB’s Executive Council.

"Of the 70 financial institutions surveyed by Bloomberg, only 3 believe we’ll see movement on Thursday. Thus you would have to say the ammo for an euro bounce back is lessening day by day," say UKForex in a note to clients.

As such we will have to await Draghi’s pronouncements after the decision for clues as to whether this will change in December.

Yesterday’s US ISM was once again strong, showing that the government shutdown had little effect on the services industries in the United States.

The services sector saw a 3.3pt rise in its employment component which will have more than cancelled out the slip seen in Friday’s manufacturing counterpart. Put together with last week’s ADP release and recent movements in jobless claims, we forecast that payrolls on Friday will rise by 141k; above the 120k market consensus. The survey has its normally wide spread of predictions; the low is 50k, the high is 175k.