Pound Euro Exchange Rates Report – 26th July 2010
Last week we witnessed a relatively volatile week for Sterling/Euro exchange rates with the difference between the high of 1.2003 and the low of 1.1717 being just over the 2.3% mark, a significant difference when transferring thousands of pounds overseas.
The main news of the week that caused the volatility came from the Bank of England minutes and UK Gross Domestic Product figures which were released on Wednesday and Friday morning respectively. The minutes showed that as expected the Monetary Policy Committee had voted in the same fashion as they had in June. Andrew Sentence remained the only member looking for an interest rate hike of 0.25% while the seven other members all voted for a rate hold at the record low of 0.5% a figure which has now been in place for 16 months.
Many had thought Mr Sentence may have found support from some of the other committee members and the likelihood of a rate increase in August would be a high possibility, but with the news that he is still alone on the panel a rate increase and in turn Sterling improvement may still yet be some time away. In volatile markets like these it is wise to stay in touch with your currency broker.
GDP figures for the UK soared on Friday as the second quarter showed an improvement from 0.3% in Q1 to a highly surprising 1.1%. The predictions had been for the figures to read 0.6% but at almost double this forecast the expectation of a Sterling rally was high. Surprisingly the market did not react in the way many would have expected and although a small gain was made it was not at the pace or severity expected after such a release.
In the afternoon trading session on Friday Sterling continued to make gains as the Euro weakened off as the results of the stress tests came out. These were tests that showed the level of reserves held by 91 Eurozone banks to assess how they would cope should they enter another recession. The results showed seven of the banks failed the test but the main weakness for the single currency came as many felt the tests were not strong enough leaving investors questioning just how credible they were.
The week ahead sees a number of data releases which could affect GBP-EUR exchange rates with the most important likely to be Consumer confidence figures for the UK and Eurozone unemployment figures.
If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today.
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