The EUR/GBP pairing gained yesterday as German Chancellor Angela Merkel took a giant step closer to re-election and the German and Eurozone services sectors expanded by more than expected.
However, gains were limited by disappointing manufacturing data for both the 17-nation currency bloc and its largest economy, and the common currency softened after European Central Bank President Mario Draghi commented that he is prepared to implement additional easing to ensure the Eurozone’s recovery continues.
As the European session opened the Euro was little changed prior to the publication of the German Ifo business confidence gauge.
Although the German central bank remains cautious regarding the nation’s economy, further signs of improvement will support the view that Germany is leading the Eurozone away from the record-long recession exited in the second quarter.
In its latest monthly report Bundesbank stated; ‘At the start of summer 2013, the German economy didn’t sustain the rebound from earlier in the year. Company investment confirms the evidence of a solid foundation, though signs of a dramatic upswing are lacking.’
The Euro/Pound Sterling pairing is currently trading in the region of 0.8430
Economists forecast that today’s German sentiment measure increased for a fifth month, rising from 107.5 in August to 108 in September.
Separate reports detailing confidence in current conditions and expectations were also expected to show improvement, rising to 112.5 and 104.0 respectively.
Before the data was published economist Rob Wood asserted; ‘Merkel can celebrate a personal victory in the German elections and a strongly improving domestic economy. Domestic demand will need to be the main driver of German growth, which in turn will help the periphery pursue an export-led recovery to shake off the remnants of the Euro crisis.’
However, while the German Ifo business climate index did increase this month it only rose modestly to 107.7, and this pretty lacklustre result is unlikely to trigger notable Euro gains.
Further movement in the EUR/GBP pairing could occur in response to UK loans for house purchase figures, while a US consumer confidence index is likely to inspire EUR/USD volatility.
Euro (EUR) Exchange Rates
As of 09:10
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3509 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8430 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4351 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6228 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3886 >