EUR/GBP Rate & Comments for 20th August 2010

EUR/GBP - 1.217

Sterling recovered yesterday to jump more than a cent yesterday against the US dollar after far stronger than expected retail sales data boosted hopes that the UK economy can maintain positive momentum in the 3rd quarter. There was an expectation that sales would fall last month after World Cup related electronic goods sales tapered off. However, the figures surprised with a 1.1% jump which saw a surge in confidence in sterling. What pleased analysts was that there was no anomalous factors – such as Christmas spending – that could have artificially affected the figure. Public sector borrowing figures were also down and data showed that money supply increased – this is good for growth, as it shows more money is ‘flowing’ through the system, which causes growth. However, mortgage lending figures were poor and so far this morning this has seen investor sentiment drop as concerns grow over the UK’s growth prospects. This sums up the ebb and flow in sentiment over currency. With an absence of any ‘hard’ data today, call in now to ensure you catch the sentiment at the peak.

In the Eurozone, the single currency took a back seat yesterday as most of the data releases came from both the UK and the USA. However, the main release was German PPI purchasing manager data which came in better than expected at 0.5%. Sterling performed relatively well against the euro but fell short of breaking through the 1.22/£1 barrier. There is no real data out off the Euro zone today, but following poor US unemployment figures yesterday, the euro is likely to trade on poor sentiment and suffer against the US dollar. Get in touch now for a live exchange rate.

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