Euro Maintains Gains Against US Dollar as Manufacturing Activity Grows in December

The euro maintained its gains against the US dollar on Thursday following a series of data releases that revealed strong activity in the manufacturing sector throughout the European Union. However, the shared currency failed to remain strong against the British pound, which was supported by solid growth in UK retail sales last month.

IHS Markit, a financial research firm that releases monthly readings for manufacturing activity in major economies, stated earlier today that the European Union saw an activity increase in December. The manufacturing purchasing managers’ index for the euro zone climbed to 60.6 in December from 60.1 in November, setting a new record high for the index.

The stronger reading for Europe’s manufacturing activity was largely due to higher factory output and increased orders, both of which reached the best levels since 2000. Job creation also rose as companies boosted their hiring activity, in line with stronger demand and improved short term outlook.

Two other reports from the research firm showed that the equivalent indexes of France and Germany also strengthen this month. The German economy had the fastest growth rate in more than 6 years, buoyed by a new record high for manufacturing activity at 63.3 and a jump in services purchasing managers’ index to 55.5, the highest level in two years.

Manufacturing activity in France rose to 62.6 in December, the best level in 17 years, despite a drop in overall economic activity to the lowest point in two months. The drop was caused by a dip in services activity to 59.4 this month from 60.4 last month.

The data allowed the euro to maintain gains it had scored yesterday against the US dollar following a disappointing reading for the US core consumer price index. However, the shared currency declined against the British pound as UK retail sales jumped 1.1% in November, beating estimates of a 0.4% gain.

EUR/USD traded at 1.1829 as of 11:50 GMT on Thursday after touching 1.1835 at 11:00 GMT, the best level for the day. EUR/USD began trading today at 1.1835.

EUR/GBP was at 0.8797 after falling to 0.8783 at 09:55 GMT, the pair’s weakest level since December 11. EUR/GBP started today at 0.8824.

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