(MENAFN– ecpulse) The euro managed to extend its weekly gain against its counterparts, although investors` worries remained spread over the deteriorating political calamity in a number of Eurozone member states.
The single currency climbed after a strong run of data that boosted hopes the euro area is finally going to emerge from the longest post-war economic contraction. The euro rallied to a one-month high against the dollar last week, buoyed by a quicker-than-anticipated expansion in German private sector business activity — major sign of recovery in the euro zone economy.
Positive Eurozone Purchasing Managers’ Index on manufacturing and services lifted sentiment in Europe. The flash composite PMI, that measures business activity in both manufacturing and services sectors, rose to 18-month high of 50.4 in July.
Economic activity in the Eurozone’s largest economies improved in July with both manufacturing and services sectors performing better than expectations. Markit PMI report showed Germany`s manufacturing rose to 17-month high, while the pace of contraction moderated in France.
Recording a third weekly gain against the dollar, the euro stayed in the well-known $1.32 areas following the release of a closely watched business confidence survey results from Germany, the biggest economy in Europe.
Confidence among German businesses rose for a third consecutive month in July, signaling that prospects for recovery in Europe`s largest economy remained brighter than that of the remaining states
The single currency, however, was still weighed as concerns mounted over the future of the Portuguese government and uncertainty about the Fed’s stimulus program. Federal Reserve Chairman Ben Bernanke reassured investors that the central bank will keep rates low for a long time to come, even if it started to wind down its bond-buying program.
The Federal Reserve is still on track to keep its $85 billion-a-month bond-buying program in place at its policy meeting next week, but officials likely will debate changes to the way the central bank describes its plans for the program and for short-term interest rates.
Royal Pound
The sterling headed for its third weekly advance last week as economic data signaling the UK recovery is strengthening boosted demand for the currency ahead of this week’s interest rate decision by the Bank of England.
The UK economy picked in the second quarter of 2013 to double the pace of growth the first quarter logged. UK’s GDP expanded to 0.6 percent growth as expected in the second quarter from 0.3 percent, while the annual GDP figure expanded as expected at 1.4 percent from 0.3 percent.
The pound strengthened against the dollar, recording the longest winning streak in almost three months, after Prime Minister David Cameron said the British economy is “healing” and that the improvement should allow the government to lower taxes.
The pound was also boosted last week as markets reacted to the news that confirmed that Catherine Middleton and Prince William became proud parents of a baby boy who is third in line for the throne. The royal baby is to be George Alexander Louis and will be known as His Royal Highness Prince George of Cambridge.
The news boosted Sterling because it led to speculation that cheerful Britons would spend more on consumer goods, bolstering UK economic outlook in a similar manner to the Royal Wedding and Diamond Jubilee in recent years.
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