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Some respite for EUR

Some respite for EUR

Day one of the EU Leaders summit saw agreement to ease repayment rules for emergency loans to Spanish banks and relax conditions on possible help for Italy. Slow progress was made on creating a fund of €120bn to stimulate growth and create jobs across the region.

The German economy showed further signs that it is no longer immune to the eurozone crisis as unemployment rose for the third consecutive month in June. The number of people out of work increased by 7,000 to 2.88 million with the unemployment rate unchanged at 6.8%. This suggests companies are becoming more cautious about hiring new workers.

Although the final release of Q1 2012 UK GDP was unchanged at -0.3%, there were several historical revisions including a downward adjustment to the final quarter of 2011 to -0.4%. The detail of the release reveals an ongoing weakness in household spending with three of the last four quarters revised down. Any hopes of the consumer driving an uplift in activity in the short term are fading fast, prompting increased expectations that the government will be forced to add further stimulus to the economy.

In short the Euro found some support and Sterling has weakened a fraction.

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