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Euro Strengthens Amid Weak Industrial Data

H.S. Borji
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Euro Strengthens Amid Weak Industrial Data

The euro continued to strengthen Wednesday, as the forex market shrugged off weaker than forecast Eurozone industrial output.

Eurozone industrial output declined 0.2 percent at the beginning of the year, official data from the European Commission’s statistics branch confirmed today. The release, which showed output declined in intermediate goods, energy and durable consumer goods, nevertheless confirmed that recovery was on track. Compared to January 2013, industrial production accelerated 2.1 percent.

The EURGBP currency pair strengthened to an intraday high of 0.8368. As of 15:45 GMT, the pair was trading at 0.8361, a gain of nearly 0.3 percent. The pair has accelerated more than three-quarters of a percent over the past five days, propelled by upbeat remarks from European Central Bank President Mario Draghi, who said last week the currency bloc was showing signs of modest recovery.

Draghi’s comments are certainly questionable. Excluding Germany, the Eurozone continues to struggle, with major economies like France and Italy showing signs of persistent weakness. Despite these vulnerabilities, the Eurozone economy is expected to growth slightly faster than expected this year at 1.2 percent, according to the European Commission.

The British pound, meanwhile, has been under pressure all week after Bank of England Deputy Governor Charlie Bean said a stronger currency could harm the UK’s already shaky export recovery.

The euro continued to strengthen against the US dollar, soaring past 1.39 US. As of 16:20 GMT, the EURUSD was trading at 1.3909, a gain of nearly 0.4 percent.

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