The euro lost ground against sterling yesterday but strengthened against the dollar for the third consecutive day and reached its highest level since before the turn of the year. The move came despite some worse-than-expected manufacturing purchasing managers’ index figures from Germany. Analysts had forecasted a reading of 63.2 in January (from 63.3 the month before), but the actual figure was 61.2. No matter – any figure above 50.0 shows growth so the reading is still extremely strong.
The Eurozone’s PMI was also impressive, with composite, manufacturing and services posting 58.6, 59.6 and 57.6 respectively. Meanwhile, German composite and services PMI posted 58.8 and 57.0.
Today we have the February consumer confidence in Germany and business climate, but the main highlight will be the European Central Bank’s interest rate decision and subsequent press conference. The mid-December meeting minutes struck a hawkish tone and if President Mario Draghi and the rest of the Monetary Policy Committee point to an amendment in their fiscal stimulus programme, we could see some significant euro strengthening. However, it is known that Draghi favours a weak euro so the sentiments expressed could be fairly muted.