The EUR/GBP and EUR/USD exchange rates both weakened on Wednesday as data out of the Eurozone put more pressure upon the European Central Bank to take action in order to boost growth in the struggling region.
Factory Orders data out of Germany got the single currency off to a poor start as it showed a decline in June. According to the Federal Statistics Office, industrial orders in the Eurozone’s largest economy declined by 3.2% in June, adding to the 1.6% fall reported in May.
Orders from inside Germany fell by 1.9% and those from outside the Eurozone tumbled by 4.1%. The decline was a result of geopolitical concerns caused by the situation in Ukraine.
Tensions increased on Wednesday as Russian troops mobilised along the eastern Ukrainian border. Concerns are mounting that Moscow could launch direct intervention as Ukrainian government troops prepare to launch a large offensive against the pro-Russian rebel stronghold of Donetsk.
As the session progressed, the Euro fell further after data showed that Italy’s gross domestic product fell unexpectedly in the second quarter. The fall now means that the country is back in recession.
According to the national statistics institute Istat, GDP in Italy fell by 0.2% from the previous quarter, when it dropped by 0.1%. Economists had been expecting growth of 0.1%. On an annual basis the Italian economy contracted by 0.3%.
The data now puts more pressure onto Italian Prime Minister Matteo Renzi to reform the nation’s economy. Youth unemployment is above 40% and the country has a sovereign debt of up to €2 trillion.
Because of the data releases, the Pound was able to hold above the 1.26 level despite the publication of UK data, which showed that Industrial and Manufacturing Production rose less than expected in June. The report adds to signs that the UK’s economic recovery may be slowing.
Against the US Dollar the Euro was at nine-month low due to signs that the US economy is strengthening and on demand for safer havens as a result of the build-up of Russian troops.
Euro Exchanges
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