EUR/GBP Rate & Comments for 16th July 2010

EUR/GBP - 1.192

Sterling continued its rally against the US dollar yesterday, hitting a 2½ month high of $1.5393 as risk appetite helped drive demand for the pound. Data in the UK was fairly thin on the ground and the movement was driven by strong data out of the USA. In addition, key ‘technical’ (i.e. mathematical analysis of exchange rate graphs) levels were breached – notably $1.5310/ £1 which has been a technical resistance point versus the November 2009 high of $1.6880/ £1. Breaking this barrier opened the door (from a technical perspective) for the pound to keep going towards $1.55/£1. In terms of fundamental data, there is little out today, but investors and traders are waiting for the first estimate of 2nd Quarter GDP for the UK – out next week. This should provide the impetus to push volatility and see the pound shoot up or drop back down. Get in touch now to ensure you don’t miss out on decent rates.

In the Euro zone, poor sentiment towards the region eased as the Spanish government experienced better than expected demand for 15 year bonds. This saw the euro strengthen against sterling after the pound started the morning strongly above 1.20/£1. However, the pound’s early gains were short lived but one analyst felt that there is potential for the pound to strengthen further against the euro over the coming year. Get in touch now – especially if moving euros into sterling, as the current rate feels too low to last much longer.

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