The Euro remained firmer against the subdued Pound on Tuesday despite the release of data which showed that investor confidence in the Eurozone’s largest economy fell to its lowest level since August last year.
Pound Sterling remains subdued ahead of Wednesday’s Monetary Policy Committee meeting minutes and unemployment data. A lack of domestic data on Tuesday left the currency at the mercy of international events and data releases.
According to the Mannheim based ZEW Centre for European Economic Research, its index for investor sentiment fell to 46.6 in March, a sharp decline from the 55.7 recorded in the previous month. The fall was the worst seen in six months and was the third consecutive decline, raising concerns over the strength of the German economic recovery.
Concerns over the situation in Ukraine and the deteriorating relationship between Germany and Russia as a result of the latter’s invasion of the Crimea dampened investor sentiment. German businesses have a lot of interests in Russia and the cooling in relations over Ukraine has the potential to harm business and investment in the two nations.
“Sentiment was probably hit by worries about the Ukraine conflict, the strong Euro, the lack of policy easing by the ECB earlier this month and doubts about the strength of the Chinese economy following a string of disappointing data from China. Despite its decline the ZEW indicator remains well above its long-term average value and at a level consistent with strong growth of the German economy,” said an economist at Amsterdam based ABN Amro Bank.
After the ZEW report was released the Euro fell to a session low against the US Dollar and weakened against the Swiss Franc and other peers.
The Euro remains vulnerable to the situation in Ukraine and could soften further depending on the tone of Russian President Vladimir Putin’s speech to the Russian parliament due to be held later in the session. Any hint of Russian forces pushing deeper into Ukraine will weaken the Euro and boost demand for safer assets.
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,1.3908 ,
Euro,,British Pound,0.8375 ,
Euro,,Australian Dollar,1.5305 ,
Euro,,Canadian Dollar,1.5356 ,
British Pound,,Euro,1.1935 ,