Streling To Euro Rate Gains On Weak German Retail Sales Data

Modified: Monday, 2 April 2012 15:45 BST - Written by Minesh Chaudhari

STORY LINK Streling To Euro Rate Gains On Weak German Retail Sales Data

The Current Sterling To Euro Exchange Rate Is 1.2050.

Friday’s session brought a mixed bag of currency news for the euro. On the credit side, the single currency was buoyed by the announcement by Spain’s centre-right government that it was set to trim €27bn from its annual budget. This massive swathe of expenditure cuts played well with market participants, who remain keen on the principal of ‘sound money’. The eurogroup summit of eurozone Finance Ministers in Copenhagen yielded further positive news for the euro, bringing the announcement that the region’s member nations had reached an agreement to expand the economic area’s firewall, designed to prop-up debt-burdened nations, from its current level of €500bn to €800bn. This is lower than the amount that the OECD had been calling for earlier in the week, however it represents a significant bolstering of the fund, which should serve to improve investor sentiment towards the euro moving forward.

There was further positive news from France, with the announcement that the nation’s public sector deficit had decreased from 7.1% of its annual GDP in 2010, to a more manageable 5.7% last year. Ostensibly this was good news, however cynics might question whether the drop was due to a lower level of GDP in 2011 versus 2010.

On the debit side for the euro, economic data released on Friday morning, showed that Retail Sales in Germany’s giant economy had shrunk unexpectedly in February. Analysts had been anticipating a bounce for the German shop sales numbers, following January’s disappointing contraction.

If whole-of-eurozone Retail Sales numbers for February, penned in for release on Wednesday, follow the lead of Germany’s shop sales numbers, then this week’s session could prove to be another losing one for the euro.

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