Pound Sterling to Euro Exchange Rate softens as Eurozone inflation data exceeds expectations

The Euro pushed higher against the Pound on Friday as investors widely ignored disappointing unemployment data and focused on a slightly better-than-forecast inflation report. Against the US Dollar the Euro hit its highest level so far this year.

According to the European Union’s statistics office based in Luxembourg, consumer prices grew at an annual rate of 0.8%. The rate was the same as the figure recorded in the preceding two months and did little to reduce speculation that the European Central Bank will announce new stimulus measures at next week’s policy meeting in order to aid the regions fragile economic recovery.

Economists had been expecting the data to show that inflation fell to 0.7%. The data released today is only an estimate with the final report due on March 17th. The ECB holds its policy meeting on March 6th and speculation is growing that it could announce a cut to interest rates in an effort to stimulate growth.

A separate report showed that the region’s unemployment rate remained just off a record high of 12.1%. It came in at 12%, the same rate it has been stuck at since September and despite recent reports of unemployment rising in Finland, France and Italy.

Unemployment in Italy reached a new record high of 12.9% in December and is the highest figure since records began in 1977. Economists had been expecting the rate to remain at the previous level of 12.7%. Investor also chose to ignore the latest retail sales figures out of Greece. Sales plummeted by -6.10% in December a sharp contrast to the 2.9% increase expected by economists.