The euro jumped to a two-and-a-half month high against the dollar and to a ten-week high against the British pound after German business sentiment rose for the fourth time in a row in February, and hit a seven-month high. This gave optimism that Europe’s largest economy is picking up steam and avoiding recession.
The data compiled by the Munich-based Ifo think tank, reported that the business climate index, based on a monthly survey of some 7,000 German companies, beat expectations to rise to 109.6 in February from 108.3 in January. Economists had forecast a reading of 108.8.
The index is based on sectors that include manufacturing, construction, wholesale and retail sectors.
Ifo Institute Chief economist, Gernot Nerb said that he doesn’t see any damage from the euro area. Germany is exporting more outside the European Union and this is helping the economy gain speed.
EURUSD jumped after the data to hit 1.3337, rising from the European session open level of 1.3276.
EURGBP rose to 0.8487 from an earlier low of 0.8455. This is the highest level since December 12 last year.