Yesterday the Euro edged lower against the Pound as UK data confirmed that Britain’s economy experienced its best growth for six years in 2013.
The EUR/GBP pairing was also knocked slightly by an unexpected decline in Germany’s import price index.
While this morning’s UK house price data, which showed that home values rose for a thirteenth month, had little impact on the Pound the EUR/GBP pairing retained declines as European trading progressed.
Not even an upbeat German consumer confidence report helped the Euro recover losses.
The German GfK consumer confidence measure advanced from a positively revised 7.7 in January to 8.2 in February rather than coming in at 7.6 as forecast.
The report detailed a 13-year high in the income expectations index, which produced a reading of 46.2, an over two year high in the economic expectations measure and an over seven year high in the willingness-to-buy index.
In a statement published with the survey figures, market researcher GfK stated; ‘German consumer sentiment has started the new year 2014 full of zest. Expectations with regard to both the economy and to income, as well as the willingness to spend, are rising sharply.’
After the data German stocks rose for a second day, but the Euro was little changed.
However, the EUR/GBP pairing could climb tomorrow if German unemployment, Eurozone consumer confidence and German inflation data impress.
The number of out of work German’s is expected to fall by 5,000 in January while economic/industrial/services confidence in the Eurozone improved and consumer confidence held at -11.7.
Signs that the Eurozone began the new year on a positive footing could lend its common currency support and help it recover losses against the Pound.
That being said, UK mortgage approvals and net consumer credit figures will also be of interest.
Of course Euro movement may also be inspired by the Federal Open Market Committee’s policy announcement, scheduled for 19:00 GMT.
Although the prospect of the Fed tapering by 10 billion Dollars has largely been priced into the market, a surprise decision from the FOMC could trigger extensive volatility.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3669 ,
Euro,,British Pound,0.8241 ,
Euro,,New Zealand Dollar,1.6524 ,