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Euro fights back against recent slump

Euro fights back against recent slump

There was a firmer tone to risk appetite across financial markets yesterday. The euro moved slightly higher, supported by the rise in Eurozone bond yields. Yesterday also saw the first reading of Q4 GDP which showed economic growth in the Eurozone slowed to 0.3% from 2.2% – delta and Omicron waves weighed on activity, but overall, the economy expanded by 5.2% in 2021. German inflation also added some positive news having fallen by less than anticipated in January.

As we get underway this morning, the firmer tone to the euro is reflected in EUR/USD opening near the halfway mark of $1.12-1.13, EUR/GBP opened at the midpoint of 83-84p while GBP/USD is changing hands in the heart of the $1.34-1.35 range. 

Looking ahead today, the main release of note will be the Eurozone unemployment rate which is forecast to continue its negative run. Across the pond, the manufacturing ISM is also expected to edge downwards as the Omicron wave weighed slightly on activity in the sector. In the UK, Partygate continues to jeopardise Johnson’s leadership.

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