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Euro Boosted As German Industrial Production Bounces Back

Euro Boosted As German Industrial Production Bounces Back

Oliver Morrison, Analyst

Talking Points:

- German industrial production rose 2.8% in January.

- That’s the best performance since August 2016.

- EURGBP rises to 0.8676.

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The Euro strengthened in early European trading Wednesday after data showed German industrial production, which makes up 30% of the Euro-Zone’s largest economy, grew at its quickest pace in January since August last year.

The sector expanded 2.8% in the month, according to official data from the Federal Statistical Office (Destatis), bouncing back from the revised 2.4% drop in December, and slightly higher than the 2.7% market estimate.

The data also defy poor factory orders data released earlier this week that showed a drop of 7.4%, the worst month in eight years, driven by slowing domestic demand.

Destatis said the drop in industrial production in December was a blip, likely caused by factories closing due to poor weather. It added that the positive momentum was likely to build in the coming months.

The Euro has been in a tight range versus the US Dollar, but the strength gained on recent positive data from the Euro-Zone has been evident against the British Pound, which is being held back by weak data and Brexit uncertainty.

EURGBP has gained a further 0.0015 in early Wednesday trading to reach 0.8676. No one, however, at this stage expects the European Central Bank to drop its interest rate easing bias when it announces a policy decision tomorrow.

EURGBP 15-Minute Chart (Intraday, March 08 2017)

--- Written by Oliver Morrison, Analyst

To contact Oliver, email him at oliver.morrison@ig.com

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