Although concerning developments in the Ukraine pushed investors towards safe-haven assets during European trading, the Euro still edged higher against the Pound thanks to positive economic reports from the Eurozone.
The Euro advanced modestly on its British rival ahead of the release of German inflation figures as German unemployment fell by more than forecast and economic confidence in the Eurozone climbed.
As the likelihood of the European Central Bank introducing additional stimulus has restrained the Euro’s movement in recent weeks, this positive report relieved some of the pressure.
The unexpected increase in sentiment from January’s revised 101 to 101.2 saw economist Anatoli Annenkov comment; ‘These movements are broadly in line with expectations. Economic conditions seem to have stabilised in many parts of the Euro region, while Germany continues to deliver strong numbers.’
The 101.2 reading was the highest since mid-2011 and beat economists’ predictions for 100.7.
The European Commission’s services index climbed from 2.4 to 3.2 while a measure of industrial confidence crept up from -3.8 to -3.4.
Meanwhile, Pound movement was a little limited, although the appeal of the currency was slightly lessened as the Lloyd’s UK business barometer fell 10 points to 53 this month. The result is a reflection of the fact that the slowing pace of the UK’s economic recovery has caused some industry-based concern.
Sterling also slid as Bank of England policy maker Spencer Dale was quoted as saying; ‘Because of the lasting effects of the financial crisis, interest rates will remain below that level for some time. At some point rates will rise. I don’t know when but the key thing is when they do rise they are likely to rise gradually because we’re very focused on making sure we support the recovery.’
Further EUR/GBP movement could occur today as the BoE’s David Miles addresses an economics and government forum.
The policy maker has previously intimated that a 2015 rate increase might be appropriate.
Of course with so much importance being attached to inflation in the Eurozone, today’s German consumer price index will also be of considerable interest.
Developments in the US, including Janet Yellen’s address to congress, will also be responsible for currency market movement.
Euro (EUR) Exchange Rates
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