EUR/GBP Rate & Comments for 4th May 2010

EUR/GBP - 1.155

Sterling has started the week relatively quietly ahead of Thursday’s general election. The latest polls show the Conservatives in front, but still lacking the required majority to take overall victory. With the prospect of a hung parliament looming, this is seemingly having little effect on the value of sterling and many analysts now feel that a hung parliament has been ‘priced in’ – i.e. already factored into the price. Another view is that a hung parliament might be a good thing for the pound, as stronger cross-party consensus would be needed to tackle the UK’s deficit. However, alternatively, traders might just be waiting to see what happens on Thursday before making a move – wary of placing large trades. Therefore expect a lot of volatility on Friday. Aside from the election, out today we have data on mortgage approvals and consumer credit, neither of which are expected to throw up any major surprises that will affect the pound. Call in now to discuss a strategy to avoid losing out over the election period.

In the Euro zone, over the weekend European ministers agreed to a 110bn bailout to help Greece avoid defaulting on its debt. The ailing economy has a repayment due on the 19th May, but the deal rests on the bailout receiving parliamentary approval in Germany in order to release funds – a factor which has concerned many traders. Aside from the Greek bailout, there was German retail sales data this morning which unexpectedly showed a monthly decline of 2.4% against an expectation of no movement. The election is likely to take centre stage alongside the Greek situation – get in touch now to avoid losing out on any payments you have to make in the next few days.

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