The Pound Sterling to Euro (GBP/EUR) exchange rate gave up some ground on Thursday after reaching new 7-year highs in the previous session. Supporting the single currency was positive Inflation data out of Germany and a stronger than forecast Industrial production report for the Eurozone.
The Pound Sterling to Euro (GBP/EUR) exchange rate softened was trading in the region of 1.414
The Euro also regained some ground against other major peers as economists suggested that the currency’s run of losses had been overdone. Against the US Dollar (USD), the Euro remained in the region of a 12-year low.
Economic data also lent support to the single currency. Inflation data out of Germany, the Eurozone’s largest economy, showed that inflation climbed back into positive territory last month as consumer prices rose by 0.1% on an annual basis. In the previous month, the consumer price index had fallen by 0.4% due to falling energy prices. On a monthly basis, inflation rose by 0.9%. Both figures matched economist forecasts.
Despite the rise, the nation’s inflation rate remains well under the 2% target of the European Central Bank (ECB).
The Euro also received support from data, which showed that industrial production in the 19-member currency bloc increased by 1.2% on an annual basis in the first month of the year. On a monthly basis production eased -0.1%. The monthly figure is likely to improve over the coming months as the ECB’s quantitative easing programme is set to send the Euro lower and provide a boon for the region’s manufacturers.
The yearly figure is the best seen since July last year and raises hopes that the region’s economy is finally beginning to see signs of improvement.
UK Data Limits Pound Losses
Further losses for the Pound were limited as a report released by the Office for National Statistics (ONS) showed that the UK’s trade deficit narrowed to £616 million in the first month of 2015. The data showed that imports fell by £2.5 billion, the largest monthly drop seen since July 2006. The large fall was mostly down to falling oil prices.
Excluding the impact of falling oil prices on the trade deficit, which also led to a decline of UK fuel exports, the balance of trade in goods excluding oil also narrowed to a deficit of £7.8bn.
That was the lowest monthly deficit in goods since June 2013.
Following the release of the data, the Pound pushed higher against the US Dollar.
