The EUR/GBP Exchange Rate was weaker on Monday and the Euro was down against the majority of its most traded peers after industrial production data highlighted the weakness in the Eurozone’s economic recovery.
The single currency also remains under heavy pressure following comments made over the weekend by European Central Bank President Mario Draghi. Mr Draghi warned that more monetary stimulus could be required to counter the negative effects of the stubbornly high Euro and to encourage growth, and inflation in the region.
“A strengthening of the exchange rate requires further monetary stimulus. That is an important dimension for our price stability,” Draghi said.
The currency tumbled against the Pound and other peers as a result.
The currency remained under pressure on Monday after data showed that industrial production across the Eurozone as a whole rose slightly in February but that production in the Eurozone’s weaker economies fell.
The small rise in production and the fact that improvement was spread across the stronger economies highlighted the weakness of the region’s economic recovery.
According to the European Union’s statistics agency industrial output across the Eurozone increased by 0.2% in February and by 1.7% from the previous year. The increase was widely expected by economists. The biggest rises in production were in Malta (+5.4%), and Ireland (+5.0%), while the biggest fall was in Estonia (-2.2%).
Also weighing upon sentiment for the Euro is the escalating situation occurring in Ukraine. Much of the eastern part of the country has seen protests by pro-Russians. Over the weekend a Ukrainian serviceman was killed and other wounded in a battle with pro-Russian gunmen. Today up to 100 pro Russian gunmen attacked the police headquarters of the eastern city of Horlivka.
Against the US Dollar the Euro fell to a session low after the governor of the Bank of France said that a weaker Euro is desirable.
Volatility is expected over the coming days if the Ukrainian situation deteriorates further. Tomorrow sees the release of the latest ZEW economic sentiment index and Eurozone balance of trade data. Strong showings from them could aid the Euro higher but Draghi’s comments are expected to weigh for the rest of the week.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8268 ,
Euro,,US Dollar,1.3821 ,
Euro,,Canadian Dollar,1.5161 ,
Euro,,Australian Dollar,1.4716 ,
[/table]
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