The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened to its best level in a month on Tuesday as economic data out of Germany and the wider Eurozone beat economist forecasts. Reduced worries over Greece also offered support.
The Euro to Pound Sterling (EUR/GBP) exchange rate reached a session high of 0.7385
Signs that the Eurozone is on course to make a strong recovery over the coming months boosted the Euro. Data released in the single currency bloc showed that Germany’s private sector grew at its strongest rate since July 2014 in March.
According to Markit’s flash composite PMI, which tracks activity in both the manufacturing and service sectors rose to an eight month high of 55.3, up from February’s figure of 53.8 and beat economist forecasts for a reading of 54.0.
The composite PMI for the wider Eurozone also beat forecasts by coming in at 54.1.
‘The Eurozone’s economic recovery gained further momentum in March, with the PMI hitting its highest for almost four years. The improvement provides welcome news to a region awaiting signs that the ECB’s quantitative easing is stimulating the real economy,’ said Markit chief economist Chris Williamson.
Greece Optimism Supports Euro (EUR) Exchange Rate
Also supporting the Euro was increased expectations that a deal would be reached between Greece and its creditors.
Greek Prime Minister Alexis Tsipras met with German Chancellort Angela Merkel on Monday and the tone set by the two leaders was one of reconciliation.
Greece and Germany have been engaged in a war of words over the past few months.
According to European Parliament Chief Martin Schulz, a deal could be reached between Greece and its Eurozone partners by the end of this week.
‘I think by the end of this week a new deal will be reached that should be sufficient to release the urgent financing. Greece would then have not more than three months to present a credible, detailed and definitive plan,’ Schulz said in an interview with Itlay’s La Repubblica newspaper.
UK Inflation Falls to Record Low of 0%
The Pound weakened further on Tuesday against the majority of its most traded peers after data showed that inflation in the UK fell to a record low level of zero in February.
Economists had predicted that the consumer prices index would slide to just 0.1% in February, down from 0.3% in January. Instead, Consumer Price Inflation came in at exactly zero.
The drop in inflation was a result of a sharp 3.4% decline in food prices and a 16.6% tumble in fuel costs.