As trading began on Tuesday the Euro was close to a two-week low against the Pound as the British currency was supported by the expectation of a strong UK employment report on Wednesday and hopes that today’s British business optimism measure would show improvement.
Later in the European session the Euro fluctuated against peers like the Pound as a measure of German investor confidence defied forecasts and dipped for the first time in six months.
The ZEW economic sentiment measure fell from 62.0 in December to 61.7 in January rather than rising to 64.0 as expected.
While this slightly disappointing result could be viewed as a sign of the fragility of the Eurozone’s return to growth and a reflection of public concerns, Euro losses were tempered as separate reports showed a stronger-than-forecast jump in a gauge of the current situation in Germany and a strong advance in the ZEW economic sentiment survey for the Eurozone.
The current situation measure rose from 32.4 to 41.2 while the Eurozone economic sentiment gauge advanced from 68.3 to 73.3.
In response to this morning’s mixed bag of data economic researcher Ralph Solveen commented; ‘We see a general recovery of the German economy, with a little stronger GDP growth than there was in the last quarter. We are hesitant to increase forecasts for investment too strongly because wage pressure will hamper the expansion prospects of companies.’
Meanwhile, ZEW President Professor Clemens Fuest issued the following comment with the figures; ‘For months, the surveyed financial market experts have expected an economic upswing. In this month’s survey the clearly improved assessment of the current economic situation seems to confirm these expectations.’
While today’s UK business confidence report could inspire further EUR/GBP movement, fluctuations may be restrained ahead of tomorrow’s UK employment data.
The British unemployment rate is forecast to decline to 7.3 per cent in the three months to November, taking it within touching distance of the Bank of England’s 7 per cent threshold for increasing interest rates.
Influential data for the Eurozone is a little lacking tomorrow, but Thursday heralds the release of services and manufacturing reports for the currency bloc and its largest economy so the week is still likely to witness Euro volatility.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8235,
Euro,,US Dollar,1.3533 ,
Euro,,Canadian Dollar,1.4897,
Euro,,Australian Dollar,1.5418 ,
Euro,,New Zealand Dollar,1.6307 ,
US Dollar,,Euro ,0.7389 ,
Pound Sterling,,Euro,1.2143,
Canadian Dollar,,Euro,0.6715 ,
Australian Dollar,,Euro,0.6489 ,
New Zealand Dollar,,Euro,0.6131 ,
[/table]
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