Sterling is on track to make its worst week in a year as investors and speculators continue to hedge their bets that the currency will continue to become increasingly volatile ahead of the vote.
Also weighing upon the Pound was a report, which showed that half of the UK population now think that inflation will rise sharply over the next year.
People expect the consumer prices index will be 2.8% in a year’s time, up from 2.5% in May.
The jitters over a possible ‘Scotchexit’ allowed the Euro to shrug off concerns generated by a report, which showed that the 18-member Eurozone stagnated in the second quarter.
Data released by the Luxembourg based European Statistic Office showed that the Eurozone’s Gross Domestic Product (GDP) was unchanged from the 0.2% recorded in the first quarter of 2014.
Falling investment and geopolitical issues caused the region’s economy to stagnate.
Eurostat reported that GDP in the second quarter was flat at 0.0%. The figure was forecast by economists. According to the statistics agency the best performing economies were; Malta +1.3%, Latvia +1.0%, Lithuania, Hungary and the UK with +0.8%. The worst performing economies were; Romania -1.0%, Denmark and Cyprus -0.3%, Germany and Italy both saw contractions of -0.2%.
‘Already lacklustre Eurozone economic activity seemingly suffered in the second quarter as heightened global geopolitical tensions, particularly the Ukraine/Russia crisis weighed down upon sentiment’ said Howard Archer from IHS Global Insight.
Following Thursday’s sharp decline because of the European Central Bank (ECB) cutting interest rates to a new record low of 0.05% the Euro saw some support in Friday’s session from traders seeking deals and a positive report from Germany, which kept hopes for a Eurozone recovery alive.
The ECB also cut its economic forecast for growth this year to 0.9% down from the 1.0% previously stated.
Early in the session, a report out of the Eurozone’s largest economy showed that Industrial Production rallied strongly in July. Production increased by 1.9% on a month on month basis, defying forecasts for a rise of just 0.3%.
On an annual basis, production increased by 2.5%.
The Euro was also finding support from hopes that a peace deal can be reached between Ukraine and pro-Russian separatists as leaders from both sides gather for peace talks in Belarus.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.2954 ,
Euro,,British Pound,0.7940 ,
Euro,,Australian Dollar,1.3827 ,
Euro,,Canadian Dollar,1.4095 ,