Euro Pound Exchange Rate – 29th June 2010
July 17, 2010 Leave a comment
Last week we saw the Euro reach a high of 1.2210, this as expectations of the UK budget would get Britain back on a sound fiscal footing offering more incentive for investors to cover extreme short positions in the UK currency, thus driving Sterling to its strongest level against the single currency in more than 18 months. The Budget announcement by Chancellor of the Exchequer George Osborne on Tuesday 22 June showed the new UK coalition government is serious about tackling its budget deficit, with tough spending cuts looming we could see Sterling supported in the mid-term. The other important news this week was the rating agency Moody’s statement on Wednesday that it would see Britain keep its triple-A rating if the government successfully implemented the tightest budget in a generation. This is seen as boosting the appeal of UK assets among overseas investors and helping the Pound, this as the Euro came under broad selling pressure after the cost of protecting Greek government debt against default rose further, emphasising the revival of Sterling more as a result of Euro weakness rather than Sterling strength.
With the growing volatility in the markets the use of a forward contract can benefit you in eliminating risk and safeguarding your funds. The forward option takes time, interest rate differential and volatility in the market into consideration giving you the option of buying live to the markets on the day by paying a small deposit upfront, with a settlement period for the balance of up to 2 years.
Looking to the week ahead the most crucial news may the House price index (HPI) and Gross domestic product (GDP) announcements in the UK on Wednesday 30 June. The House price index (HPI) delivered by Nationwide bank gives us the change in the selling price of homes with mortgages. The HPI is the UK’s second earliest report on housing inflation and the impact tends to be significant, as it is a leading indicator of the housing industry’s health and because rising house prices attract investors and spur industry activity, however it varies from month to month. The GDP being the broadest measure of economic activity and the primary gauge of the economy’s health as it measures change in the inflation-adjusted value of all goods and services produced by the economy; it may prove to be crucial to the GBP/EUR currency pairing.
With the news on the GDP and HPI in the UK and the growing financial crisis in the Eurozone this week is likely to be another volatile one for the GBP/ EUR currency pairing. See the relevant data releases below for a concise round up of volatile market movers; however it is well worth taking the time for a consultation with a currency broker.
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