GBP/EUR: Euro Slips vs Pound As Trade Wars Hit Germany
  • Euro (EUR) slips as German data disappoints and optimism fades
  • German industrial production increased just 7.8% in May
  • US Dollar (USD) rebounds as coronavirus numbers increase
  • Euro US Dollar (EUR/USD) exchange rate drops through $1.13

The Euro US Dollar exchange rate is paring gains from the previous session. The pair settled on Monday +0.5% at US$1.1309.

At 07:15 UTC, EUR/USD trades -0.2% at US$1.1285. This is at the lower end of the daily traded range of US$1.1281 – US$1.1333 after weak German data and as the mood in the market turns.

According to the Statistics Office, German industrial production rebounded in May, rising 7.8% compared to April. The rebound comes after production fell by -17.5% in April.

Whilst the data shows that the economy is recovering after lockdown, the bounce back was less than the 10% rebound that analysts had been expecting.

A slew of data from Germany over the past few days has revealed that the worst of the coronavirus impact is behind the eurozone’s largest economy. However, the rebound is showing signs of being more moderate in the industrial sector than what analysts had forecast.

The US Dollar is bounding higher today across the board, after selling off sharply in the previous session. The optimism that guided the market on Monday and saw investors sell out of the safe haven US Dollar has faded on Tuesday.

Despite US data showing that the US economy is rebounding strongly, investors are growing increasingly cautious of the rising number of coronavirus cases. US coronavirus cases continue to increase by 46,000 a day on Monday, down from the record 57,000 before the weekend but still a very concerning figure.

Florida has now surpassed Arizona with the steepest and most alarming rise in cases in the US. Miami is rolling back some easing measures, closing restaurants. Should more areas follow suit the economic rebound could be de-railed.

The news comes after data in the previous session showed that the dominant service sector in the US rebounded firmly in June. The ISM non-manufacturing PMI jumped to 57.1, well ahead of the 50-level forecast and the 45.5 level from May.