🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

Forex - Euro hits new 10-month high against sterling

Published 08/08/2017, 08:11 AM
© Reuters.  Euro hits fresh 10-month high against sterling
EUR/GBP
-
DX
-

Investing.com - The euro rose to fresh 10-month highs against the pound on Tuesday in quiet trade as recent indications that the recovery in the euro zone is deepening continued to underpin demand for the single currency.

EUR/GBP rose to 0.9074, the most since the most since October 12, 2016 and was at 0.9068 by 07.53 a.m. ET (11.53 a.m. GMT).

The euro has strengthened in recent week amid expectations that the European Central Bank will begin scaling back its monetary stimulus program in the autumn.

Data last week showed that the euro zone economy grew by a stronger than forecast 0.6% in the second quarter, double the 0.3% rate of growth in the UK over the same period.

Sterling has come under pressure since the Bank of England left interest rates on hold at record lows last week and cut its growth forecasts for wages and the economy amid ongoing headwinds from Brexit.

Uncertainty over the size of the UK’s ‘Brexit bill’ has also weighed on the pound.

The euro shrugged off disappointing German trade data released on Tuesday.

Figures earlier showed that German exports fell by 2.8% in June, snapping five months of gains. It was the biggest drop since August 2015. German imports dropped by 4.5%, the largest decline since January 2009.

That drove Germany’s trade surplus up to €21.1 billion, from €20.3 billion in May, a 10-month high.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.15% to 93.16.

The index was holding well above last Wednesday’s 15-month trough of 92.41, but was off the high of 93.64 set on Friday after an upbeat U.S. jobs report revived expectations for another rate hike by the Federal Reserve this year.

The U.S. economy added 209,000 jobs last month, handily beating expectations for a gain of 183,000, while an uptick in wage growth indicated that inflationary pressures are firming.

Markets believe stronger inflation will enable the Fed to stick to its plans for a third interest rate hike this year.

The greenback had been pressured lower by a combination of worries over political turmoil in Washington and recent lackluster economic reports, which raised doubts over whether the Fed would be able to stick to its planned tightening path.

Investors were looking ahead to U.S. inflation reports later in the week for indications of whether the recovery in the dollar is sustainable in the longer term.

A report on U.S. producer prices for July is due out on Thursday and the consumer price inflation report will be released on Friday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.