Sterling vs. Euro hits 3 week low – 28th February 2011
March 1, 2011 Leave a comment
28th February 2011 – Sterling vs. Euro; 3 week low
Sterling fell on Friday as data showing a deeper fourth-quarter UK economic contraction reduced expectations of an interest rate hike by mid-year and raised concerns about how the economy can deal with rising inflation. Revised data showed the UK economy shrank 0.6 percent in the last three months of 2010, more than the preliminary reading of a 0.4 percent contraction. This data highlights the dilemma faced by the BoE in balancing rising inflation, which is double the central bank’s 2 percent target.
Due to this, Sterling slumped to a three-week low against the Euro, extending its downward movement versus the single currency this week. Also helping to boost the single currency was hawkish rhetoric on Euro zone interest rates, as European Central Bank policymaker Axel Weber kept the speculators on their toes when he stated that Euro zone rates could only rise from here. The Euro looked to end the week nearly 2 percent higher on the week, its best performance since late October.
Euro Pound Graph – February 2011
The negative risks to the Euro’s health have been repressed for some time now. The real financial uncertainties that remain behind the Euro-region have been offered a temporary stay of execution when policy officials offered their open-ended promises to further bolster the bailout effort going forward. Yet, in the weeks since, conditions have continued to deteriorate. And, reminding of the trouble ahead, German policymakers discussed proposals aimed at insuring a hard-line approach to further bailout accommodations at EU meetings. It just so happens, that the Parliament plans to vote on these proposals on March 17 – one week before the EU summit.
The volatility last week highlights the risk that private individuals are exposed to when international financial events entirely out of their control move the markets. With this inherit risk in the background and your life savings in the foreground it is well worth while seeking the guidance of an experienced currency trader to assist you through your currency purchase.
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