Currency Rates

EURO/GBP - 1.119

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Sterling had a very volatile day yesterday, hitting 1.1220/ £1 in early trading before dropping back towards 1.1150/ £1. Against the US dollar, sterling dropped from above $1.50/ £1 to hit a 2 week low of $1.4874/ £1. Despite jumping against the euro after Portugal’s credit rating was cut by the rating agency Fitch, the pound suffered against the US dollar as the last Budget before the general election did little to allay concerns over the UK’s budget deficit. Initial reaction from the City was negative as many felt that this was a ‘political’ budget rather than an ‘economic’ one – i.e. the focus was on vote winning rather than putting a clear plan in place to clear the deficit. It would be reasonable to expect that a prospective government would inform the public as to how they would spend their money on the key issue facing the economy – the £167bn gap in public finances. What angered many analysts was the fact that there was no mention of this, and as such, sentiment towards the UK stays very much as it was – negative. In addition, the Royal Bank of Canada released a list of countries ranked according to their risk of default on government debt. The UK was third behind Greece and Portugal. Today, we have monthly retail sales data which is expected to show an improvement on last month. Get in touch now for a price.

In the Euro zone, the credit rating agency Fitch downgraded the credit rating for Portugal which saw the euro drop to a 10 month low against the US dollar of $1.3358/ 1. In addition, confusion over a potential Greek bailout caused concerns for many investors, as Germany and France sent conflicting signals over their respective approaches. Germany’s Chancellor Angela Merkel was adamant that German finances should not be used and French Premier Nicolas Sarkozy stating that the EU should unite and show that it can solve its own problems. Despite this, data out yesterday was positive – business confidence increased and purchasing managers data also showed an improvement. Today we have spending data for France and German consumer confidence and ECB President Trichet speaks to the European Parliament. Call in today to avoid missing out.

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