EUR/GBP Rate & Comments for 6th September 2010

EUR/GBP - 1.194

Sterling suffered last week as fundamental data showed signs that the UK recovery is abruptly running out of steam. Purchasing manager data gives a bearing on how much companies are buying and is a useful tool in gauging the relative health of the economy. This came in at the lowest level for 9 months. In addition, Nationwide house price data showed that house prices dropped by 0.9% last month – the second consecutive monthly drop. New construction orders also fell by 14% on Friday which added further concern to investors over the growth prospects in the UK economy as the spending cuts take effect. It is a busy week this week, with manufacturing data, wholesale inflation, retail sales and the Bank of England interest rate decision. There is likely to be significant volatility and the outlook doesn’t look ideal for sterling strength. Call in now to ensure that you have protected yourself and your upcoming payments.

In the Euro zone, last week saw the European Central Bank announced that it would extend its credit line to banks until January 2011 and kept interest rates on hold. Monetary policy stays fairly loose too. Caution remains in the region, with mixed data leaving investors a little uncertain. Germany continues to outperform the rest of Europe with strong export and manufacturing figures, but this contrasts sharply with the ‘Southern European’ states of Greece, Spain, Portugal and Ireland. Sentix consumer confidence data is released today ahead of a more comprehensive figure later in the week and should give a good bearing on institutional risk appetite which many feel has improved marginally over the last few months. Call in now to ensure you don’t miss out.

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