EUR/GBP extends recovery, nearing 0.8700 following upbeat Eurozone data

• EUR/USD hits 0.8690 following better-than-expected Eurozone data.
• Eurozone unemployment declined unexpectedly while producer prices rose.
• The Pound remains on its back foot following weak services activity figures.

The Euro appreciates for the third consecutive day against a weaker British Pound on Thursday, approaching 0.8700, fuelled by upbeat Eurozone sentiment data and an unexpected decline in the region’s jobless rate.

Data released by Eurostat revealed that the Eurozone’s unemployment rate dropped to 6.3% in November, against market expectations of a steady 6.4% reading. 

Beyond that, November's  Producer Prices Index (PPI) accelerated to 0.5% from 0.2% in October, beyond the 0.2% expected by the market. Year-on-year, producer prices contracted at a 1.7% pace from -0.5% in October, but still at a slower pace than the -1.9% forecasted by market analysts.

Finally, most of the economic sentiment indicators released by the European Commission have beaten expectations. Consumer Confidence has risen to -13.1 in December from 14.6 in November, Business Climate improved to -0.56 from -0.66, and Industrial Sentiment ticked up to -9 from -9.3 in the previous month.

Earlier in the day, figures from Germany revealed an unexpected improvement in Factory Orders, which rose 5.6% in November, following a 1.6% increment in October, against the market consensus, which had anticipated a 1.0% decline.

The UK economic calendar is thin today, but the Pound remains on the defensive following a downward revision of the S&P Global Services PMI on Monday, which highlights weak economic growth in a context of hot inflationary pressures.