Euro Pound Exchange Rate Report – 24th May 2010
May 25, 2010 Leave a comment
Last week we witnessed another volatile week for Sterling against the single currency with a 3.2% fluctuation in exchange rates across the week. In real money terms, this equated to a difference of over £5,500 when purchasing €200,000. The movements came following a series of economic announcements in both the UK and the Eurozone further proving the fragile state of both economies and in turn their respective currencies.
The main details of note from a UK perspective came in the shape of the Consumer Price Index showing a hike by 0.6% taking the annual rate to 3.7%, higher than the expected 3.5% that had been forecast making the current level the highest seen in 17 months. This was followed by the bank of England minutes which showed an expected 9-0 vote from the Monetary Policy Committee to hold the base rate at 0.5% and pause its quantitative easing program at £200bn. The final piece of data released on Friday saw the UK’s budget deficit revised down to £156bn from £163bn. With reducing this figure a top priority for PM Cameron and deputy PM Clegg the news would have been well received as the new coalition government attempt to bring the UK out of the financial crisis it is still in.
The biggest news of the week in the Eurozone came from Germany where Chancellor Angela Merkel announced a ban on naked short selling. This caused investors to sell off the Euro causing some short term weakness for the single currency. This was followed by negative economic sentiment figures from Germany and the Eurozone as a whole with figures of 45.8 and 37.6 respectively being released.
When reviewing the weeks activity and the highlights listed above it further proves that Sterling is still in a fragile state. In normal circumstances last week would have surely led to significant strength for the Pound with negative news in the Eurozone and positive news in the UK. This as we saw did not materialise.
The week ahead sees a host of data releases for both the UK and Eurozone starting with the UKs revised GDP figure released on Tuesday morning. The other main releases are the UKs mortgage approvals, house pricing index and consumer confidence figures. In the Eurozone we will see consumer confidence figures and German CPI data released on Wednesday and Thursday respectively. With the above releases known to cause volatility on the markets it could be wise to get in touch with your currency broker.
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