Euro slides on weak GDP figures

The euro fell to its
lowest level against the dollar in six weeks on Wednesday
(May 16th) after figures showed the eurozone economy
shrank more than expected.

EUR/USD slumped to 1.2642 as the
trading bloc’s stagnant economy contracted for the sixth
consecutive quarter at the start of the year.

France slipped back into recession
in the first quarter, while Germany’s measly rate of growth was not
enough to stem the tide.

The news raised speculation that
the European Central Bank may further ease monetary policy to
stimulate growth.

Meanwhile the pound was trading
higher against the greenback on Wednesday as the Bank of England
forecast an improvement in economic growth later this year.

In his last inflation report as the
bank’s governor, Sir Mervyn King said growth could rise to 0.5 per
cent in the second quarter, from 0.3 per cent at the start of the
year.

The dollars to pounds
exchange rate was up marginally at 1.5216 in trading
yesterday.

Sterling also found support as US
industrial production fell more than expected in April, while the
New York Fed’s Empire State business conditions index contracted in
May.