BLBG:Euro Weakens On German Production Slump As Pound Rises After BOE
The euro weakened as reports showing declines in German industrial production and exports added to evidence that Europe’s sovereign debt crisis is hurting the region’s largest economies.
The 17-nation currency fell against all but one of its 16 major counterparts, sliding 0.7 percent versus the yen. German industrial output dropped 0.9 percent in June from May, while exports declined 1.5 percent the same month, reports showed today. The pound rose against the dollar and the euro after Bank of England Governor Mervyn King said an interest-rate cut may be counterproductive. The yen rose against its most-traded peers.
“Germany is definitely showing signs of cracking,” said Kathleen Brooks, a research director in London at Forex.com, a unit of online currency trading company Gain Capital Holdings Inc. “In the near term we could be treading water.” Europe’s common currency will likely trade between $1.2280 and $1.2450 in the next week, she said.
The euro fell 0.3 percent to $1.2367 at 6:36 a.m. New York time. It dropped 0.6 percent to 96.85 yen, while the Japanese currency rose 0.4 percent to 78.31 per dollar.
German factory output was forecast to drop of 0.8 percent, the median of 34 estimates in a Bloomberg News survey showed. Exports were predicted to slide 1.3 percent, according to a separate survey.
The pound advanced 0.3 percent to $1.5665 and strengthened 0.6 percent to 78.92 pence per euro.
King also signaled continued support for Prime Minister David Cameron’s budget squeeze as he presented lower forecasts for economic growth today and said Britain’s recovery will be a “slow process.”
To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
