The Pound Sterling to Euro (GBP/EUR) exchange rate traded in a tight range on Friday as data out of the UK and Germany came in below economist expectations.
GBP/EUR Exchange Rate hit a session high of 1.338
The Euro began Friday’s session lower against the Pound and other major peers as concerns over the situation on Greece weighed. Negotiations between New Greek Finance Minister Yanis Varoufakis and his German counterpart Wolfgang Schaeuble were seen to have ended with mixed results as Schauble announced that they had ‘agreed to disagree’.
Data released early in the session showed that industrial production in Germany increased for a fourth consecutive month, albeit at a weaker rate than economists had been forecasting.
According to the report released by the Berlin based Economy Ministry, industrial production inched higher by just 0.1% in December, below the rise of 0.4% expected. On a year on year basis, production declined by -0.7%.
Despite the soft data, the Bundesbank is forecasting that the German economy has overcome the weakness seen last year. Thursday’s strong factory orders data suggests that production will show a substantial improvement in the next report.
As well as an improvement in the domestic economy, the bank forecasts that the start of the European Central Bank’s €1.1 trillion quantitative easing programme will lend more support to the wider Eurozone economy. A weaker Euro is also set to support the currency bloc’s exporters.
Data out of Spain also put pressure on the Euro on Friday as it showed that the Eurozone’s fourth largest economy saw its industrial production turn negative. According to the report, industrial production fell for a third consecutive month and tumbled by -0.9% on an annual basis. Economists had hoping for a year on year rise of 1.21%. Month on month production fell -0.3%.
The Pound Sterling meanwhile came under pressure after a report showed that the UK’s trade deficit widened more than expected last month.
According to the Office for National Statistics (ONS) the nation’s trade balance fell to a seasonally adjusted £-10.15 billion from £-9.28 billion. Analysts had been expecting the trade balance to fall to -£9.10 billion last month.
Exports in January inched higher to 0.1% while imports jumped by 2.7%, pushed up by a nearly 40% leap in the volume of oil imports on the month, reversing a trend of falling oil imports in previous months.
With no more economic data releases due from the UK and Eurozone market attention will now turn to upcoming releases from the USA.
Euro Exchange Rates:
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