The common currency held close to a 5-month trough versus the Japanese Yen and a multi-year low against the Pound Sterling after falling broadly on the back of disappointing economic data from Germany. Nonetheless, the Euro’s broad decline is likely welcome news for Mario Draghi, head of the European Central Bank, who recently stressed that the too-strong Euro was acting as a drain on the Eurozone’s economy, especially as it relates to the export sector.
As reported at 2:06 p.m. (JST) in Tokyo, the EUR/JPY was trading at 137.50 Yen, within striking distance of the earlier struck 5-month trough while the EUR/GBP fell to 78.88 pence, a price last seen in September 2012. The EUR/USD also struck a 1-month trough at $1.3520, with Euro investors watching for a break of the $1.35 level.
Diverging Policies Driving Sterling Demand
In the U.K., inflation data which came close to the Bank of England’s 2% target and a rise in housing prices which is heating up the sector increased speculation that the central bank is likely to soon consider an interest rate hike. The disparity between monetary policies of the BoE and the ECB are encouraging investors to favor the Pound Sterling over the common currency.