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Your weekly currency update provided by FrenchEntrée.com

Dear <<Full Name>>,
 
Welcome to the FrenchEntrée Euro Currency Update - a weekly bulletin for anyone who needs to keep up to date with the latest currency exchange rates. 
 
 

22 August 2014

Currency exchange rate: 1GBP = 1.25 euros


Mixed fortunes for the euro this week as a surging dollar carried all before it, while sterling wobbled after some divergent signals on interest rates. On the whole, the Eurozone data releases weren’t as bad as previous weeks' - although they failed to impress they at least managed to get the euro off of its lows.

Booming housing numbers out of the US saw the euro start to slip early in the week and this was followed by the release of the FOMC minutes that showed that members are surprised by the speed of recovery in unemployment and are starting to question how much slack there is in the economy. The market took this as bullish for US interest rates and the dollar rose across the board with the euro falling to an 11 month low.

Against sterling the euro initially rose after weaker than expected UK inflation but then reversed after the MPC minutes announced that 2 members had broken ranks and voted for a rate increase. This was the first split vote in more than three years and sent sterling soaring and the euro down once again.

However all was not lost as the euro zone PMI’s came out on Thursday to give the sagging currency a boost. Not that they were that good, just not as bad as they could have been. French output stabilized in August as a rise in the Services sector offset another poor performance in manufacturing. German manufacturing and services both fell from the previous month but were above the 50 mark for the 16th consecutive month while the euro-wide data was also down. The worry is that this data predates the recent sanctions so they could get worse.

The numbers, while no overly good, were enough to lift the euro off its lows by the close, but it may be a temporary reprieve. Next week sees another raft of confidence and unemployment numbers out of Germany as well as the important monthly inflation data for the Eurozone. The expectation is that it will hold steady at 0.4%, but if it were to come in lower, the ECB could well be forced into action once again.

The euro has held up well this year considering the problems in the Ukraine, the weakness of the French economy and the downturn in Germany, but this week it finally gave way and slipped another notch down against the dollar. It is losing out to some of the commodity bloc but is actually gaining on the yen as it takes another lurch lower. It is clawing a bit of ground back against sterling as it falls out of favour with investors but the weekend speeches by the Fed’s Yellen and ECB Draghi at Jackson Hole could set the tone for next week. 
 

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