Investing.com - The pound rose to session highs against the broadly weaker euro on Tuesday after data showed that German economic sentiment deteriorated sharply this month, weighing on the outlook for growth in the euro area’s largest economy.
EUR/GBP was down 0.21% to 0.7954 from around 0.7962 ahead of the release of the report.
The pair was likely to find support at around the 0.7915 level and resistance at 0.7990.
The euro weakened broadly after the Zew Institute said its index of economic sentiment fell to 8.6 from 27.1 in July. It was the weakest reading since December 2012, and fell far short of forecasts of 18.2.
The current conditions component of the index declined to 44.3 from 61.8 in July, the lowest in seven months.
The ZEW said the decline in investor confidence was likely connected the impact of ongoing geopolitical tensions on the German economy. Recent economic data has indicated that the effects of the Ukraine crisis are acting as a drag on the German economy.
The report noted that industrial production and incoming orders suggest “markedly reduced investment activities by German firms against the backdrop of uncertain sales prospects.”
The ZEW also said the report pointed to weaker than expected German economic growth in 2014.
The euro zone, as well as Germany and France, was to release data on second quarter growth on Thursday, as well as revised data on consumer prices, with a consensus forecasts for weak numbers.
Weak data on growth and inflation would add to pressure on the European Central Bank to implement fresh measures to shore up the recovery after it cut rates to record lows in June.
The euro fell to almost nine-month lows against the dollar following the release of the report, with EUR/USD down 0.29% to 1.3343 from 1.3358 earlier.
The euro fell to session lows against the yen, with EUR/JPY down 0.17% to 136.45 from 136.43 ahead of the data, not far from the eight-and-a-half month lows of 135.71 set on Friday.