The Euro exchange rate has soared as Euro-area confidence rose by a better-than-expected margin.
Economic confidence in the Eurozone has increased by a larger margin than economists had been predicting, adding to the hopes that the region could emerge from recession before the end of the year.
According to the European Commission in Brussels the index of executive and consumer sentiment increased to 89.2 for January, up from the revised 87.8 figure posted in December, making it the highest level since June 2012. Economists had been forecasting a rise of 88.2.
Against the US Dollar the Euro broke through the $1.35 mark for the first time since December 2011. Against the Japanese Yen the currency soared to a 33-month high and against the Pound the currency reached a new yearly high.
“The improvement in financial markets is starting to show some effect on business confidence,” said a senior economist in London. “But it is a very slow process and it is too soon to suggest we are seeing a real recovery in the euro area.”
The Euros strength comes from the increased optimism emerging from the region despite several of its member nations being mired in recession. Fresh data out of Spain showed that the embattled nation’s recession has deepened by a bigger than expected margin with GDP falling by 0.7% in the fourth quarter of 2012.
Several economists are predicting that the Euro will continue to strengthen over the next few months as confidence and cash begins to return to the region. It seems that the biggest shocks have already happened and risk aversion should not be as high as had been previously seen during the height of the crisis. Nonetheless continued weakness in the South of the region and continuing doubts over the economies of France, Spain and the UK could yet prove to be a drag on the currency.
These exchange rates were correct as of 10:50 am
The Pound to Euro exchange rate is currently trading at 1.1638
The Pound to US Dollar exchange rate is currently trading at 1.5762
The Pound to Australian Dollar exchange rate is currently trading at 1.5101
The Euro to US Dollar exchange rate is currently trading at 1.3539
The Euro to Pound exchange rate is currently trading at 0.8590