EUR/GBP Rate & Comments for 5th May 2010

EUR/GBP - 1.168

Sterling had a mixed day yesterday falling to a 5 week low against the US dollar of $1.5090/ £1 and gaining against the euro to finish the day well above the 1.16/ £1 mark. The pound suffered over concerns that the crisis in Greece and subsequent bail out would spread to other countries. The FTSE stock market fell as bank shares suffered Greece related selling and mining companies fell as Australia announced a potential new tax on mining operations. This caused investors to sell the pound and buy US dollars. Lower than expected data on lending also added to sterling’s woes against the US currency as figures showed that month on month lending to individuals fell by £1.8bn and new mortgage approvals dropped by 3,000 on last month. Out today we have house price data from the Halifax and data on the construction sector. The election is still the biggest issue in the short term – call in now for a live exchange rate.

In the Euro zone, despite the 110bn ‘austerity package’ agreed by the EU and IMF to help Greece avoid defaulting on its debt, there is a total lack of confidence in the plan which hit the euro hard today. The single currency fell against the US dollar to a 1 year low of below 1.31/ $1 as fears spread over sovereign debt default spreading to other southern European countries. Bond markets are showing that investors expect default in Greece, Spain and Portugal. With many public sector workers in Greece on strike due to the measures imposed by the IMF, the country is in deep crisis. German retail sales unexpectedly fell by 2.4% against an expectation that the figures would remain the same. Out today, we have monthly retail sales for the Euro zone as a whole which are expected to show a marginal improvement on the month. There is a lot of volatility this week – call in now to avoid missing out.

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