EUR/GBP Rate & Comments for 25th June 2010

EUR/GBP - 1.210

Sterling extended gains yesterday and hit the highest level since November 2008 against the euro after renewed sovereign debt fears in Greece contrasted sharply with a new found optimism that the UK budget cuts will rein in the country’s record deficit. Following the new government’s emergency budget, investors are now confident that the UK is well on the way to being on a stable financial footing again. One of the big drivers yesterday was investors buying back sterling after placing extreme bets that the pound would fall. This extra demand has seen the pound at a 5 month high against a basket of major currencies, after peaking yesterday at 1.2222/£1 and $1.5011/ £1. We have the G8 meetings going on today, and any positive rhetoric will continue to have a strong effect on the pound. Get in touch now for a live price.

In the Euro zone, yesterday saw Greek debt take centre stage again after the cost of insuring against Greek government default jumped to record levels. The market in this type of insurance gives investors a very clear picture of the sentiment towards the region, and the record cost meant that the euro fell yesterday with one analyst at French bank Societe Generale expecting the pound to hit 1.25/ £1 soon. Data out today in the Euro zone is expected to show that German import prices have increased by 2% in May – up 9.5% on last year. France’s GDP growth is expected to remain unchanged at 0.1% for the quarter. Call in now for a live exchange rate.

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