The Euro has halted its declines and has instead begun to reverse its losses against the US Dollar and Japanese Yen.
The single currency had been weakened by political concerns from Spain and France, but reversed its losses as the latest services PMI data showed that output in the region shrank less than had been estimated in January.
The Markit compiled Purchasing Managers Index, which measures business activity across thousands of companies across the Eurozone, hit a 10-month high rising from 47.2 in December to 48.6 in January. Any figure below 50 signals a contraction. The figure is slowly improving, having shown signs of improvement for three-months in a row.
“The Euro zone is showing clear signs of healing, with the downturn easing sharply in January and the region moving closer to stabilisation in the first quarter,” said Chris Williamson, chief economist at Markit. “Growth is heavily skewed towards Germany however, where the contrast with the contraction seen in France is the greatest seen since the survey began in 1998.”
Against the US Dollar the Euro has strengthened by 0.2% and edged up by 0.1% against the British Pound.
The forecast for the Euro is that the currency could succumb to selling ahead of the European Central Banks meeting on Thursday. Traders are wary of saying that the Euro will begin a downward turned after it lost nearly 1% against the Dollar. The Euro hit a 14-month high last week.
The corruption scandal hitting Spanish politics and the uncertainty over the outcome of the Italian general election both have the ability to derail the currencies recovery. As long as the economic data continues to show signs of improvement then investors may choose to focus on the economic factors rather than the political ones.
These exchange rates were correct as of 11:00 am
The Pound to Euro exchange rate is currently trading at 1.1644
The Pound to US Dollar exchange rate is currently trading at 1.5770
The Pound to Australian Dollar exchange rate is currently trading at 1.5169
The Euro to US Dollar exchange rate is currently trading at 1.3539
The Euro to Pound exchange rate is currently trading at 0.8584
The Euro to Australian Dollar exchange rate is currently trading at 1.3022
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