Euro Pound Currency Report 11th January 2010

11th January 2010

GBP/EUR trading began last Monday at the 1.125 level after strong readings for the UK manufacturing sector and mortgage approvals increased, fuelling optimism that the British economy is improving.

The manufacturing purchasing manager’s index on Monday came in up for December, higher than November and exceeding forecasts. This shows that UK manufacturing activity expanded at its fastest pace in more than two years. Other data showed that British lenders in November approved the highest number of home mortgages since March 2008.

However, by Tuesday rates began to fall towards the 1.11 level, but it was not the economic data that shaped Sterling’s performance, it was politics. News of an attempt to oust Prime Minister Brown sent the Pound lower only for it to rebound as quickly as it fell once news filtered through that the plot had failed. This perfectly illustrates the volatility of the markets and the bonuses of being able to lock in to an exchange rate for up to two years in advance through the use of a forward contract.

This week saw few economic data releases within the Euro zone; however the Euro continued to struggle after the recent downgrading for both Spain and Greece’s credit rating. Further to this, figures indicated unemployment increased to 10%, it’s highest level in 12 years, and retail sales also fell by 1.2%.

Looking forward to next week we have the UK GDP estimate. If the Estimates are seen as ‘Bullish’ this will potentially move Sterling up however if the estimate is seen as ‘Bearish’ we could see Sterling lose ground against the single currency. Furthermore we have the first European Central Bank meeting which is unlikely to feature any official change, but is likely to include Jean Claude Trichet’s opinions of what lies ahead.

Visit our main website to see live currency exchange rates.

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About Expedia Tenerife Property
Estate Agent living and working in Tenerife as a property consultant

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