Currency Rates

EURO/GBP - 1.101

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Despite recovering after Monday’s poor performance, sterling failed to move above $1.50/ £1 or 1.11/ £1 and ended the day lower as fresh opinion polls showed that the UK is heading for a hung parliament at the next election. Whilst sterling did not break through the lows of Monday, there is likely to be a lot of uncertainty for sterling until the result of the up coming election is settled as neither the Conservatives nor Labour could have the requisite majority to take the harsh action required to deal with the UK’s ballooning deficit. Tory leader David Cameron made it clear that maintaining the UK’s AAA credit rating was a top priority if they were voted in and they would start to cut the deficit within 50 days of an election. He also stated that a re-elected Labour government would see sterling sent into a tail-spin, as Labour would not cut spending. Whilst this rhetoric makes sense, the market reaction was muted as investors focused on the opinion polls. Today, there is key data on the UK services sector which will be the primary focus before attention shifts to the Bank of England’s rate decision tomorrow. With some commentators predicting the pound will drop to $1.43/ £1 now is the time to get in touch to avoid losing money – especially as sterling is at 25 year lows against the Australian dollar and Canadian dollar.

In the Euro zone, CPI inflation data showed prices rose by 0.9% month on month – slightly less than the expected 1%. This didn’t have a large effect though with the markets waiting for further news of the Greek bailout. As a result, the euro price stayed pretty flat throughout the day. The cost of insuring Greek bonds against default dropped – a sign that many investors have already decided that Greece will be propped up by Germany if any problems do occur. Today we have retail sales data out for Germany and the Euro zone as a whole. This is expected to show a marginal improvement – but as ever the risk of volatility is high. Call in now for a price – especially if you are looking to bring euros into sterling at some point, as we are able to secure today’s rates for payment at a later date.

Call 0808 163 0102 or +44 (0) 207 898 0541 from outside the UKor fill out our quote form: http://www.smartcurrencyexchange.com/quote.aspx