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Posted May 11th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 11th May 2010

EUR/GBP – 1.165

Sterling gained against the US dollar throughout most of yesterday, hitting a high of $1.5054/ £1 as speculation over a deal between the Conservatives and Liberal Democrats helped calm market concerns over the political situation in the UK. Despite being up nearly 1.7% against the US dollar, the pound fell in late trading as news of Gordon Brown’s resignation opened the doors for a potential Labour-Lib Dem coalition and left the markets as concerned as they were at the start of the day. Against the euro, the pound was fairly volatile as traders digested the announcement of a 550bn package to help Greece avoid defaulting on its sovereign debt. The announcement initially caused the euro to strengthen, but the pound recovered ground later in the day as the Bank of England kept interest rates on hold and kept the emergency funding level at £200bn. Out later today we have manufacturing and industrial production data for the month. The key market moving data is the continued uncertainty over the election. Call in now for a live exchange rate.

In the Euro zone, the euro started the day well, recovering losses against the US dollar following the announcement of a new bailout deal. The bailout saw stock markets rally by several percentage points. However, in trading early this morning, the gains made by the euro have been lost again as the wave of optimism created by the 750bn injection has given way to concerns that the support will not avert a slowdown in the region as seen in Japan in the 90’s and in the USA in 2008-09. At this stage, the bailout has eased some of the concern of the last few weeks, but the Euro zone now has a tough few years ahead of it. Out today we have had German inflation data which has shown an unexpected rise. This has had little effect on the euro though. Get in touch now to ensure you plan your next payment efficiently.

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