The Euro has strengthened against the US Dollar and British Pound after the European Commission released its latest index of executive and consumer sentiment. The index increased to 91.1, up from a revised 89.5 recorded in January. Economists had been expecting an increase to 89.9
Today’s data release does not take into account the outcome of the Italian election, which ended in a stalemate and has made the prospect of a new dangerous phase of the debt crisis a very real possibility. We can expect next month’s confidence index to show a decrease in confidence as a result.
A gauge of sentiment among European manufacturers improved to minus 11.2 from minus 13.8 in January, today’s report showed. An indicator of services confidence rose to minus 5.4 from minus 7.7. Consumer sentiment increased to minus 23.6.
“Things have improved a little bit in the Eurozone, but economic conditions are still extremely tough across the region,” said Jonathan Loynes, chief European economist at Capital Economics in London. “The Italy situation could renew these market pressures and reinforce the fact that the euro zone still faces huge pressures, both economic and political.”
Eurozone GDP for the last quarter showed that the region had slipped deeper into recession. It recorded its worst performance in four years after it contracted by 0.6%. Further falls n GDP are expected in the first quarter of 2013 with some improvement due later in the year.
The picture in the Eurozone remains bleak and there is little sign of improvement as austerity measures and rising political uncertainty continue to stifle European economies. The currency’s rise is expected to be muted and a fall is possible over the course of the session as risk aversion continues to be high.
Current Euro Exchange Rates
As of 10:35 am
The Euro to Pound Sterling (EUR/GBP) exchange rate is trading in the region of 0.8643
The Euro to US Dollar (EUR/USD) exchange rate is trading in the region of 1.3089
The Euro to Australian Dollar (EUR/AUD) exchange rate is trading in the region of 1.2841
The Euro to New Zealand Dollar (EUR/NZD) exchange rate is trading in the region of 1.5891
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