European session review: EUR falls after the release of disappointing German investor survey, GBP rises as UK newly-appointed chancellor sticks to 11 March budget date

EUR fell against most major currencies in the European session on Tuesday, following the release of the German investor survey.

The ZEW's survey revealed the indicator of economic sentiment for Germany tumbled 18 points to 8.7 in  February. That was the lowest level since November and well below economists' forecast of 21.5. The feared negative effects of the coronavirus outbreak on world trade caused a significant deterioration in sentiment. Expectations regarding the export-intensive sectors' development also fell sharply. In addition, the assessment of the economic situation weakened, with the corresponding indicator dropping 6.2 points to -15.7.

A separate report from the ZEW  showed the investor confidence index for Eurozone also dropped noticeably (by 15.2 points) to 10.4 in February. Economists had forecast a reading of 30.

Weak data has raised concerns Eurozone's monetary policy will have to stay looser for longer. In addition, Reuters reported that a joint document adopted on Tuesday by the EU finance ministers, including Germany’s finance minister Olaf Scholz, said that the Eurozone should be ready for a fiscal boost if a downturn hits its economy. 

“If downside risks were to materialise, fiscal responses should be differentiated, aiming for a more supportive stance at the aggregate level, while ensuring full respect of the Stability and Growth Pact,” the statement said.

Elsewhere, GBP rose against its major rivals, helped by the UK finance minister's promise to present the budget as planned next month and the positive UK's labour market data.

“Cracking on with preparations for my first budget on March 11,” the UK's newly-appointed chancellor Rishi Sunak wrote on Twitter. “It will deliver on the promises we made to the British people – levelling up and unleashing the country's potential.” An unexpected resignation of the former chancellor Sajid Javid last week raised speculations that the budget could be pushed back. 

The report from Office for National Statistics (ONS) revealed the number of people in employment in the UK increased by 180,000 in the three months to December 2019, below 208,000 recorded in the three months to November, but above market expectations of 145,000. The unemployment rate stood at 3.8 percent in the three months to December, the lowest level since early 1975 and in line with market expectations. The claimant count, meanwhile, grew 5,500 in January 2020, following a downwardly revised 2,600 gain the previous month and below market expectations of a 22,600 gain.