Forex Market: EUR/GBP erases daily gains as German economic sentiment disappoints

The euro erased its daily gains against the British pound on trading Tuesday, following a report to show economic sentiment in Germany and the Euro zone decreased considerably more than initially projected in March.

EUR/GBP fell from a session high at 0.8385, recorded at 8:01 GMT, also the pairs highest point since December 27th, to trade at 0.8366 at 10:03 GMT, dipping 0.02% for the day. Support was likely to be received at March 17th low, 0.8342, while resistance was to be met at December 27th high, 0.8393.

According to data by the ZEW research institute, the gauge of economic sentiment for Germany declined for a third consecutive month in March to reach a reading of 46.6 from 55.7 in February. Experts had anticipated that the index will demonstrate a lesser decrease in the current month, to 51.8. In December the index of economic sentiment climbed to a peak unseen in seven years, coming in at 62. The situation in the Crimean peninsula probably caused an adverse influence on experts estimates of German economy, according to ZEW, but however, nations growth was not at risk.

The same gauge for the Euro zone also slipped this month, reaching a value of 61.5, while in February it stood at 68.5.

This indicator reflects the difference between analysts who expressed optimism about economic development during the next six months and those who were pessimistic.

The gauge of current assessment for Germany, however, improved to 51.3 in March from 50.0 during the prior month, but below expectations of an increase to 52.0. The same index for the whole Euro region also showed a certain improvement to reach -36.7 in March, while in February it was -40.2. Higher readings of this index are indicative of a healthier economy and a better business climate.

Earlier in the day, EUR/GBP rose after UK Finance Minister George Osborne appointed Ben Broadbent as Deputy Governor of the Bank of England. In June 2011 Broadbent replaced Andrew Sentance on the Bank of England Monetary Policy Committee (MPC). Osborne did not announce who is to replace Ben Broadbent on the Committee.