The Euro exchange rate made gains against both the Pound (EUR/GBP) and US Dollar (EUR/USD) on Tuesday as trade data out of Germany came in better than forecast; the UK currency meanwhile was weakened by disappointing industrial and manufacturing production data.
Data released by the German statistics office showed that the trade surplus in the Eurozone’s largest economy widened more than expected in October to €20.6 billion, a figure that was higher than the preceding month’s figure of €18.6 billion. Economists had been forecasting for the trade surplus to widen to €19.2 billion.
Also offering support to the Euro was the release of data from Cyprus, which showed that the island nation’s economy shrank at a slower pace than expected. On an annual basis the nation’s economy contracted by -1.8% in the third quarter and by -0.3% on a monthly basis. Economists had been forecasting that the Cypriot economy contracted by -2.0% year on year and by -0.4% month on month.
Cyprus has been recording shrinking gross domestic product (GDP) since the third quarter of 2011, and Tuesday’s data showed the shallowest recession since the first quarter of 2012. The report also showed that tourism and trade showed signs of improvement but output in the nation’s construction and manufacturing sectors weakened.
EUR/GBP Higher on UK Production Data
The Pound weakened against the Euro earlier in the session after data showed that manufacturing output declined for the first time in five months in October adding to concerns over a slowdown in the UK economy.
According to the Office for National Statistics (ONS), manufacturing output declined by 0.7% in November a fall from the 0.6% rise recorded in the preceding month. Industrial production meanwhile fell by 0.1%, a figure that was worse than the increase of 0.2% being forecast by economists.
‘Weak Euro-zone activity is clearly having a limiting impact on foreign demand. Nevertheless, there are grounds for optimism for manufacturers with domestic demand resilient,’ said Howard Archer, chief European economist at IHS Global Insight.
The US Dollar meanwhile was under pressure and gave up ground against the Euro as tumbling oil prices increased demand for other safe haven currencies such as the Japanese Yen. Despite the softness, the ‘Greenback’ is forecast to continue to find support from a report, which suggested that Federal Reserve policy, makers are edging closer to raising interest rates.
Euro Exchange Rates:
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