EUR/GBP Rate & Comments for 4th October 2010

EUR/GBP - 1.151

Sterling fell to a 4 month low on Friday against euro as worries over further Quantitative Easing and poor data saw investors sell the pound. Sterling fell below 1.15/£1 and dropped to a low of 1.1423/£1 in Asian trading overnight. Against the US dollar, sterling performed well as investors looked elsewhere over concerns that the Federal Reserve would pump more money into the economy over the next few weeks. Data on Friday showed that the UK manufacturing sector weakened more than expected in September, as export orders dropped fro the first time in a year. In a speech to the conservative party conference, Chancellor George Osborne has said that the UK has moved out of the financial “Danger Zone” and is set for a steady and sustainable recovery. Data out later is expected to show that UK construction activity declined for the 4th consecutive month and slumping to the lowest level since February. Call in now for a live exchange rate and to protect yourself from poor movements.

In the Euro zone, the euro had a strong week as concerns over the state of the UK and US recoveries helped boost demand for the currency. News that fewer banks had drawn down on available credit from the European Central Bank helped boost confidence. Market reaction seems fairly bizarre, as when news was announced that Spain’s credit rating had been downgraded and that the bill for the Irish banking bailout would probably top 29bn – the financial markets hardly batted an eyelid. There are some serious structural issues that need resolving but it seems that the markets feel it is a better bet than the US dollar or sterling at the moment. Speak to one of the team about protecting yourself.

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