Pound Sterling to Euro (GBP/EUR) Exchange Rate firms on UK mortgage data – forecast to rise further midweek

The Pound firmed against the Euro on Tuesday after a mortgage approval report boosted the UK currency and data out of Italy and Finland weighed upon the single currency.

Early in the session the single currency received a boost after data showed that the German economy expanded as expected in the last quarter of 2013. Exports out of the Eurozone’s largest economy jumped to the highest-level in three-years as demand for German goods increased. The nation’s GDP expanded by 0.4% in the fourth quarter and business confidence surged to a 2 ½ year high. Unemployment is also at a record low in the country, highlighting just how dominate the German economy is when other Eurozone nations are continuing to struggle.

The currency then came under some pressure as unemployment data out of Finland showed that the number of Fins out of work jumped sharply in January. The jobless rate surged from 7.9% to 8.5%. The jobless rate for the 15-24 age groups jumped to 21.2% from 16.6% in December. In the same month last year, the figure was 21.2%.

Retail sales in Italy also disappointed. Sales fell by 2.6% compared to the previous year. Economists as usual widely ignored the negative news and instead focussed on Germany.

The Pound firmed after a report showed that new mortgage approvals in the UK climbed to their highest level in more-than-six years. The data bolstered confidence that the UK economy is continuing to pick up momentum.

Sterling is forecast to make further gains on Wednesday as economists expect data to show that the UK economy expanded by 0.8% in the final quarter of 2014. If the figure comes in below expectations then we are likely to see the Pound retreat against the Euro.