Euro to Pound (EUR/GBP) Exchange Rate Falls; German ZEW Sentiment Data Flops
The Euro (EUR) is presently trading down against the Pound (GBP) at 0.7955 following highly disappointing German ZEW Economic Sentiment figures today.
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This session has seen the Euro reach highs of 0.7980 versus Sterling, whilst also stooping to lows of 0.7946.
Tuesday has unveiled unfavourable German ZEW Current Situation figures for August, falling to 44.3 from July’s 61.8; despite a forecast of 54.0. The Current Situation figures indicate how experts feel the current economic climate is performing, with these figures suggesting the economy is worsening.
Furthermore, the German ZEW Economic Sentiment statistics have flopped lower than economists had predicted, published at only 8.6 in August, undercutting the economists’ forecasts of 17.0 and July’s 61.8. Economic Sentiment denotes to experts’ present opinion on inflation, interest rates and exchange rates in the upcoming six months.
Today’s figures show the near-term German economic outlook to be far from optimistic, with such a steep decline in sentiment marking a near two year low in investment sentiment.
ZEW who conduct the survey stated: ‘The decline in economic sentiment is likely connected to the ongoing geopolitical tensions that have affected the German economy by now. In particular, current figures on industrial production and incoming orders suggest markedly reduced investment activities on the part of German firms against the backdrop of uncertain sales prospects.’
Furthermore the outlook for Germany for the latter half of 2014 fails to be optimistic, especially in light of global conflict escalations regarding Russia and Ukraine.
ZEW continued: ‘Since the economy in the Eurozone is not gaining momentum either, the signs are that economic growth in Germany will be weaker in 2014 than expected.’
Consequently the Euro has collapsed in response to such negative data and the already fragile Eurozone recovery appears further damaged, following already tentative trading within geopolitical conflicts. The Euro to Pound exchange rate has fallen with a market movement of -0.28%.
Commerzbank representative Lutz Karpowitz stated: ‘If the ZEW collapses concerns about Russia will become more intense. That means the Euro will not merely suffer as a result of a lack of momentum from other data today, but in the long run it will simply become more difficult for the Euro is the European economy is unable to take off.’
Conversely the Pound will see an influential day on Wednesday with a wealth of data publications. Most significant will be the UK Inflation Report which could cause the Pound to rally if favourable. With economists believing that UK interest rate hikes are close in the near future, the Pound is poised ready to begin its upward trajectory when faith in the UK economic performance is firm.
The present Pound to Euro exchange rate is resting at 1.2569.