On a month-on-month basis industrial production fell by -1.5 percent rather than the expected -0.4 percent. Yearly industrial production also declined -5.2 percent, down from -3.7% the previous month. Carsten Brzeski, an Economist at ING bank, commented: “German industry continues to suffer from structural changes. Add to this a further escalation of the current trade conflicts, Brexit and an ongoing structural transformation in the automotive sector and the outlook doesn’t look any better.”
Euro traders are showing increasing concern over signs of weakness in the German economy, with fears rising over a possible recession for the Eurozone’s largest economy.
Meanwhile, the German economy continues to be wracked by rising global trade tensions, slowing trade demand from China and disruption caused by rising concerns over a disorderly Brexit.
The pound held steady this morning as year-on-year Halifax House Price figures fell for a second month in a row in July, easing from 5.7 percent to 4.1 percent.
Russel Galley, a Managing Director at Halifax, commented:
“It’s worth remembering that while economic uncertainty continues to weigh on the market, the overall trend actually remains one of comparative stability, with average prices down by less than £600 over the last three months.”
However, No-deal Brexit fears continue to haunt UK markets.
The former Environment Secretary Michael Gove called the European Union’s unwillingness to negotiate with the UK as “wrong and sad”, further exacerbating fears of a disorderly exit on October 31.
Mr Gove said: “At the moment it is the EU that seems to be saying they are not interested.
“They are simply saying: ‘No, we don’t want to talk.’ I think that is wrong and sad. It is not in Europe’s interests.”
As the UK and the EU are now both working on the assumption of a no-deal in October, the GBP/EUR exchange rate is likely to remain volatile for the rest of this week.