GBP/EUR: Pound At 5 Week Low vs Euro As UK Economy Stalls
  • Euro (EUR) extends gains on US Dollar weakness & strong German retail sales
  • EZ service sector PMIs in focus
  • US Dollar (USD) declines on safe haven flows amid vaccine optimism
  • Jobs data in focus after yesterday’s weak ADP private payrolls

The Euro US Dollar (EUR/USD) exchange rate is extending gains on Thursday for a third straight session. The pair settled +0.4% on Wednesday at US$1.2115 just off the daily high. At 09:15 UTC, EUR/USD trades +0.05% at US$1.2121 after hitting a fresh 32 month high of US$1.2140

The Euro continues to scale to levels not seen for 2.5 years, mainly on the back of US Dollar weakness but strong German retail sales also offered support in the previous session. Retail sales jumped +2.6% in October compared to the previous month, up from -1.9% in September.

Eurozone retail sales data is due later and is expected to show +0.8% increase in sales month on month in October.

Prior to retail sales, service sector PMIs will be released for the Eurozone. The service sector is expected to confirm 41.3, whereby 50 separates expansion and contraction. A stronger than forecast reading could propel the Euro higher.

The US Dollar remains out of favour on Thursday as optimism over the roll out of vaccines and talk of new US fiscal stimulus prompted risk on trade. Investors are betting on global growth picking up as the covid vaccines are rolled out. Risk appetite is on the rise booting demand for riskier stocks and currencies whilst selling out of the safe haven US Dollar.

US ADP private payroll data showed that 307,000 new news were added in the private sector in November. This was down from 365,000 in October and well short of the 410,000 that analysts had pencilled in. The data highlights the stalling recovery in the US labour market amid surging covid cases and tighter business restriction. Today’s jobless claims will be watched closely for further signs that the US labour market is under increasing pressure.

Looking ahead, in addition to jobless claim investors will focus on the release of ISM non -manufacturing PMI data.