EUR/GBP Rate & Comments for 9th June 2010

EUR/GBP - 1.211

Sterling fell 1% yesterday against the euro breaching 1.20/ £1 as credit rating agency Fitch warned over the UK deficit. Fitch – which is one of the agencies responsible for the credit rating of a country’s debt – said that the challenges facing the UK in order to maintain its ‘AAA’ rating were ‘formidable’. The comments caused concern in the markets, and the pound dropped below $1.44/ £1 and slid to 1.1988/ £1. However, many analysts said that the statement offered nothing new, and simply brought the deficit back into the spotlight ahead of the emergency budget on June 22nd. As a result, sterling has recovered some of yesterday’s losses this morning – helped by the FTSE which opened 0.5% higher. Elsewhere, the UK trade deficit has stayed at £7.3bn despite an expected improvement to £7.0bn. Also, retail sales data showed a mild decline in price inflation. With the current volatility, get in touch to ensure that you don’t miss out.

In the Euro zone, yesterday saw some positives on the data front. German industrial production unexpectedly jumped to 0.9% and investor confidence improved – albeit marginally, while the German trade surplus dropped marginally. Aside from this, there was little to improve on the poor sentiment towards the Euro zone, as many public sector workers went on strike in Spain to demonstrate against the harsh cuts that have been imposed by the recent ‘austerity measures’. There is little data out today – get in touch now to ensure that you buy at the right time.

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