The euro fell significantly against sterling on Friday following strong consumer data from the UK, but faced little change in relation to the US dollar after official data confirmed a low monthly inflation figure of 0.8%. Fears of deflation contribute towards a weakened euro, but this will increase its export competitiveness.
This week a number of significant data releases will give further indications as to the success of Eurozone recovery. This morning will see the announcement of German PPI figures and tomorrow the monthly report from the Centre for European Economic Research will give an indication of economic sentiment for Germany. Eurozone figures for the services and manufacturing sectors will be released later this week which will highlight the disparity in economic performance within the Eurozone states, which could affect the strength of the 18-member state currency.
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