Euro Pound Exchange Rate – 21st June 2010
July 17, 2010 Leave a comment
Over the past week we have seen a steady decline for the Sterling/Euro currency pair. With the bearish sentiment expressed towards the Pound, Euro prices fell 1.5% over the week to a low of 1.1927 from previous highs just pushing over 1.21.
On Monday, as concern over the economies of Europe continued, Sterling was seen to be gaining against the single currency as comments from Bank of England officials suggested a rise in interest rates was needed to curb the burgeoning inflationary pressure growing within the UK economy.
This week saw the start of decisive period within the EU as Franco-German talks on Monday commenced in the order to help prevent a repeat of Greece’s debt crisis. German Chancellor Merkel and French President Sarkozy sought to find a new accord between Europe’s two largest economies on new rules for the single currency area. Government officials from Germany further quashed reports that Spain was about to apply for support during this financial crisis. However Spain themselves did little to diminish this rumour as they made statement that foreign banks were now refusing to lend to some of its banks. Germany later replied that the EU aid mechanism was in place if Madrid needed a Greek-style rescue.
However, highlighting persistent doubts about Greece’s ability to repay its debt mountain despite last month’s 110 billion Euro multilateral bailout, credit ratings agency Moody’s downgraded Greek sovereign debt by four notches to junk status.
On Tuesday, inflation data was released within the UK; that whilst showing levels to be lower than predicted, was still far above the government’s target of 2%. With inflation at 2.9%, there could be a run for the Pound as demand increases following speculation of an interest rate hike. Meanwhile, economic sentiment was seen to be highly bearish within Germany as data showed investors to hold pessimistic outlooks.
The billionaire U.S. investor George Soros said on Tuesday, that he feel Europe faces an almost inevitable recession next year and years of stagnation as policymakers’ response to the Euro Zone crisis causes a down spiral. He later went on to tell a seminar that the crisis had the potential to destroy the 27-nation EU. “The Euro’s lack of a correction mechanism or of a provision for countries to leave it could be a fatal weakness,” he said.
Sterling benefited on Wednesday from a better than predicted contraction in the benefits claimant count, falling a further 30 thousand this month. But many analysts expect Sterling to gain benefit from an easing in extreme risk aversion, especially given negative sentiment surrounding the Euro.
In his first “Mansion House” speech to the City of London’s finance elite since taking office last month, the Chancellor of the Exchequer on Wednesday evening was expected to announce banking reforms. It was however, Governor Mervyn King’s speech that impacted markets on Thursday as he indicated that the MPC was in no hurry to raise interest rates, despite prevailing high levels of inflation. This saw Sterling give back some of it’s recent gains, despite better than expected retails sales figures.
The trends displayed this past week demonstrate the worth of staying up to date in order to maximise your currency purchase potential. By contacting your currency broker for a free consultation, you can optimise that purchase. For example, buying €200,000 this past week on Friday instead of Monday, would have meant a loss of over £2400. We can help you to avoid losses by giving you relevant economic information and opinion on trends within the currency market.
For the week starting 21st June, the spotlight will continue to shine on the debt problems within Europe and the inherent troubles that the Euro will continue to face. ECB president Trichet speaks on Monday and looks likely to discuss the situation in Spain as well as the recent talks between the French and the Germans. On Tuesday we have the UK coaltion government’s new Budget where it seems likely that George Osborne will announce that the UK’s economy is in far worse shape that the previous Labour government ever let be known. With further MPC minutes due on Wednesday, see the relevant data releases below for a concise round-up of volatile market movers. With a week full of comment by policymakers, it is well worth taking the time for a consultation with your currency broker. We keep abreast of key announcements from prominent government figures both here and in Europe, helping us to help you maximise your Sterling/Euro currency potential.
If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open a currency exchange account today.