The Pound pushed back above the 1.21 level against the Euro on Monday as investors flocked to safer havens as doubts grow over the global economic recovery.
The Euro initially firmed against Sterling following the release of better-than-expected business climate data out of Germany, the Eurozone’s largest economy.
The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.
The data wasn’t enough to keep the Euro pushing higher and instead the single currency fell as concerns grow over the health of the global economy.
European stocks fell for a third day and the investor rout from emerging market currency’s has weighed heavily on perceived riskier currencies. The pull away from riskier assets came at the end of last week when weaker than expected manufacturing data out of China sparked a bout of selling as investors were spooked that the economy was slowing. As a result the Euro fell to a session low against the US Dollar.
Expectations are also growing that the Federal Reserve will announce a further reduction to its monetary easing programme when it gathers for its two day long policy meeting on Tuesday. The speculation has seen currencies such as the South African Rand and Turkish Lira tumble.
The head of the Eurozone’s group of finance ministers, Jeroen Dijsslbolem tried to ease investor concerns by saying that the regions weak recovery will not be affected by contagion from the turmoil being seen in emerging market economies.
Sterling is likely to remain supported as Tuesday sees the release of data which is expected to show that the UK economy expanded in every quarter of 2013, the first time it has done so since the start of the financial crisis in 2007.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8244 ,
Euro,,US Dollar,1.3664 ,
Euro,,Australian Dollar,1.5628 ,
Euro,,Canadian Dollar,1.5089 ,
Pound Sterling,,Euro,1.2126 ,
US Dollar,,Euro,0.7317 ,
[/table]
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