EUR/GBP Rate & Comments for 29th April 2010

EUR/GBP - 1.151

Sterling fell yesterday against the US dollar following the fallout from the Greek debt crisis that caused investors to flee to safer assets. The UK came under renewed examination in the run up to the election as analysts predicted that the crisis over government debt could spread further.

With most opinion polls pointing to a hung parliament, the pound suffered as no party would currently have the majority to push through legislation to clear the UK’s record deficit. Despite speeches from the Liberal Democrats over a ‘balanced government,’ or a coalition, markets like certainty and strong decisive government.

The pound hit a 3 week low of $1.5129/ £1 before recovering slightly towards the end of the day. Sterling stayed in a narrow range against the euro throughout yesterday but has dropped this morning after Spain suffered a credit downgrading. Further issues were caused by Gordon Brown’s shocking gaffe on the campaign trail.

There was no data out in the UK yesterday – out today, we have a house price report from the Nationwide which is expected to show a mild decline in the rate of growth in house prices. There is also the final prime ministerial debate tonight which could see more instability. Call in now on 0207 898 0549 for a live exchange rate as they are moving around quite a bit.

In the euro zone, following Tuesday’s downgrading of Greek debt to ‘junk bond’ status, the IMF (International Money Fund) is believed to have stepped in swiftly to begin negotiations over further bailout funding. The IMF chief Dominique Strauss-Kahn is rumoured to be looking at increasing the rescue package to 100-120bn over three years as opposed to the initial 45bn that was agreed several weeks ago.

This helped strengthen the euro.

Out today we have German unemployment data and money supply data. In addition, the investment bank UBS have predicted that the euro will fall to 1.20/ $1. Call in now on 0207 898 0549 to ensure you don’t miss out.

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