The Euro came under pressure yesterday as economic sentiment came in lower than expected hitting the market at 99.7 against analysts’ expectations for a figure of 101. Amid a range of headwinds, sentiment declined in both the manufacturing and service sectors. However, on the price front, consumer inflation expectations dropped, the lowest figure in close to two years. The readings have now cast some doubt over the pace of recovery in the Euro area.
Towards the end of the trading session however, the European currency received a boost after British Prime Minister Rishi Sunak announced a deal with the European Union to amend the original Northern Ireland Protocol.
Standing alongside European Commission President Ursula von der Leyen at a news conference in Windsor, Sunak said the two sides had agreed to remove "any sense of a border" between Britain and its province - a situation that had angered politicians on both sides.
The deal seeks to resolve the tensions caused by the Northern Ireland protocol, a complex agreement which set the trading rules for the British-ruled region that London agreed before it left the EU but now says are unworkable.
After the announcement of the deal the Euro immediately surged against the US dollar as the move is expected to boost export income with the UK once the trade barriers are removed.
Looking further ahead today, the main drivers of the Euro USD currency pair will be the release of key real estate data from the US as the housing price index hits the market. This will be followed by the release of consumer confidence figures as well as the Richmond Fed manufacturing index which is a key indicator of business confidence.