The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a new 1-month high on Wednesday, while the Euro to US Dollar (EUR/USD) exchange rate made gains.
The Euro to Pound Sterling (EUR/GBP) exchange rate touched a session high of 0.7385
The Euro got Wednesday’s session off to a strong start against the majority of its most traded peers as it found support from stronger than forecast German business confidence data.
Against the Pound Sterling, the single currency advanced to a fresh 1-month high before settling into a narrow range.
According to the German institute the IFO, business confidence in the Eurozone’s largest economy rose to its best level in 8-months in March. The report added to signs that the nation is on course to lead the region’s economic recovery.
The data showed that the business climate index rose to a seasonally adjusted figure of 107.9, up from the preceding month’s figure of 106.8 and beat economist expectations for an improvement to a reading of 107.3.
‘The general conditions for the German economy are favourable. Companies are confident about the future due to a weak Euro, low interest rates and the robust US economy,’ said VP Bank AG’s chief economist Thomas Gitzel.
The positive report suggests that European Central Bank President Mario Draghi was correct in declaring that a ‘sustained recovery is taking hold’.
Further gains for the Euro against the Pound were restrained following the release of better than expected UK mortgage approval data.
The data compiled by the British Banker’s Association showed that the number of new mortgages granted increased to a five month high of 37,300 in February. The number was better than forecasts for a rise to 36,900.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a session high of 1.1015
The single currency advanced against the US Dollar as the American currency came under pressure from increased expectations that the Federal Reserve will not hike interest rates until September at the earliest.
Data released on Wednesday also softened the ‘Greenback’ as mortgage applications came in below expectations.
More gains for the Euro against the US currency are likely in the short term, as investors prepare to take profits and square their positions before the end of the quarter.
‘One of the key consensus trades that will come under pressure will be definitely the Euro. $1.10 to $1.12 is a key area… if it breaks higher; we may see more position unwinding,’ said macro research analyst, Lee Jin Yang.