Euro Pound Exchange Rate Report – 29th November 2010
November 29, 2010 Leave a comment
The market last week for the Royal Pair has been characterized by range-bound trading, thin liquidity and a loss of risk appetite from investors nervous of a stuttering UK recovery. The exchange rate last week opened 1.167 to close of 1.18……
Early in the week there was selling pressure on the Euro as investors wanted to see if Ireland accepted the rescue package and what effect this would have on the wider Euro economy and particularly any anticipated contagion to the “sick men of Europe”.
This resulted in a strong Sterling outlook resulting in 2 month high on Weds. However, gains were relatively soft as general consensus was that a Euro safety net lending capacity had been established for the weakest Euro economies and that lending would be accompanied by Euro currency buying by their central banks.
At home confidence in the pound was generally weak as eyes turned to Monetary Policy Committee’s (MPC) stance on Quantitative Easing (QE), Thursday’s inflation report hearing by the Treasury Support Committee (TSC) and the Q3 GDP report on Wednesday.
Whilst Mervyn King’s comments that any inflationary pressure could be soaked up by spare capacity in the UK economy this was widely seen by MPC dissenters as in line with the MPC’s dovish nature and in agreement with the governments fears for the economy due to the lowest mortgage approvals since March 09 and weak domestic demand. The fact that Q3 GDP second estimate remained at 0.8% and hopes that exports could offset weak domestic demand did not make the squawk box busier for demand of Sterling.
This framed by the tensions in Korea, generally subdued global markets and the US holiday Thursday saw a quiet week with uncertainty the overriding feature.
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