Although yesterday’s ZEW confidence reports for Germany and the Eurozone were a little mixed, the Euro was able to advance on the Pound as investors digested the UK’s inflation report.
Sterling broadly softened as UK inflation slowed below the Bank of England’s 2 per cent target for the first time since 2009.
The British asset posted its biggest decline against the Euro for over two weeks but was able to recover some losses on Wednesday before UK employment figures were released.
However, any advances were reversed after the data showed that the UK unemployment rate climbed in the three-months through December.
According to currency strategist Valentin Marinov; ‘Sterling is lower after the unemployment rate ticked higher in December. We could see some temporary downside for Sterling from here.’
The EUR/GBP pairing was also impacted by the news that the BoE was united in its decision to leave policy unaltered.
As trading continued the Euro was moderately bolstered by an upbeat construction output report for the Eurozone.
Output increased by 0.9 per cent in December, month-on-month, wiping out November’s 0.2 per cent decline.
On the year construction output was down 0.2 per cent following a positively revised annual drop of 1.6 per cent the previous month.
The monthly increase was the first for four months.
Of the 15 member states whose data was analysed, nine reported an increase in construction output and six observed a decline.
Spain was among the nations which recorded the largest drop, of 3.3 per cent month-on-month.
France posted the third largest increase of 4.5 per cent.
The Euro could fluctuate against the US Dollar later today as the minutes from the latest Federal Open Market Committee meeting are published.
Tomorrow news from the Eurozone will drive EUR/GBP fluctuations, with German/Eurozone services and manufacturing PMI being of particular importance.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8244,
Euro,,US Dollar,1.3747,
Euro,,Canadian Dollar,1.5025,
Euro,,Australian Dollar,1.5224 ,
Euro,,New Zealand Dollar,1.6530 ,
US Dollar,,Euro ,0.7273,
Pound Sterling,,Euro,1.2130,
Canadian Dollar,,Euro,0.6663 ,
Australian Dollar,,Euro,0.6572,
New Zealand Dollar,,Euro,0.6044 ,
[/table]
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