It is no secret that the Euro has been going from strength to strength of late. Unemployment in the Eurozone is improving, as well as core inflation moving closer and closer to the European Central Bank’s target rate of 2%.
The Euro remained extremely strong today, especially against the Pound as Gross Domestic Product data revealed the Eurozone grew by double that of the UK last quarter. This has now provided investors with more belief that the eurozone recovery is really starting to strengthen as it puts its debt crisis behind it.
GDP rose by 0.6% for the second quarter and shows how far the economy has come in past few months. Unemployment data and inflation data yesterday also showed promising signs and helped the Euro to strengthen once more.
Improvement for Pound Sterling seen today.
The pound did make some inroads today, but I feel that this was not as a result of euro weakness but more of Pound strength. Manufacturing data which has been lacklustre to say the least showed that exports have increased by 15% year on year for the UK. The weaker pound has helped although analysts are expecting this stronger reading a result of firms look for international markets beyond the Eurozone. Not only this, but the recovering global economy has helped to keep the markets for both the UK and Europe buoyant.
I think that investors have been waiting for some good news regarding the Pound for some time now. The pound strengthened by nearly half a cent today against the Euro. What I would suggest is that any clients buying Euro’s with sterling keep a keen eye on data releases such as we have seen today. ‘Super Thursday’ is fast approaching and could mean that buying Euro’s with Sterling becomes more expensive.