The Euro exchange rate began Monday trading at an eleven-month high against the US Dollar, and continued to pile on the pressure against the Pound. Last Friday’s German business confidence data helped the single currency’s rise, boosting optimism that the world has witnessed the beginning-of-the-end for the Euro crisis.
The single currency also gained support from the perception that the European Central Bank’s monetary policy is less loose than that of the US Federal Reserve.
“While the Fed is still taking an accommodative policy stance, the ECB isn’t. The fact that banks are returning loans to the ECB also means a smaller balance sheet at the ECB,” said a trader at a Japanese bank.”This difference in monetary policy stance is likely to help the Euro in the very near term,” he said.
As investors have returned their funds to the single currency, the Euro has gone on to hit an eight-month high against the Australian Dollar, a thirteen-month high against the British Pound and launched upwards to a twenty-one month high against the Japanese Yen.
The strength of the Euro, despite showing optimism for the region, also has the potential to harm the region in the end as the currency bloc struggles to return to growth. The cost of European exports has risen sharply over the past few weeks, which in turn could lessen demand for European goods, a factor that could prove to be detrimental to a recovery.
The Euro could suffer a loss later in the week as the markets await the latest jobless figures. It is possible that the number of people out of work in Europe has once again risen to a record high, possibly rising as high as 11.9%.
The ECB predicts the currency bloc’s economy will shrink 0.3% this year, and President Mario Draghi said last week that the “jury is still out” on whether investor optimism can be reflected in economic momentum.
These exchange rates were correct as of 10:10 am
The Pound to Euro exchange rate is currently trading at 1.1698
The Pound to US Dollar exchange rate is currently trading at 1.5742
The Pound to Australian Dollar exchange rate is currently trading at 1.5133
The Euro to US Dollar exchange rate is currently trading at 1.3455
The Euro to Pound exchange rate is currently trading at 0.8545
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