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Posted July 22nd, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 22nd July 2010

EUR/GBP – 1.187

Sterling fell yesterday after the minutes from the Bank of England’s latest policy meeting on interest rates showed a dampened outlook for growth. As a whole, there was a lack of confidence from the policy makers as further quantitative easing (injection of money into the economy) was discussed. Despite a general agreement that inflation would stay stubbornly high, the committee felt that the outlook for growth was poor. Against the US dollar, the pound slipped back below $1.52/ £1 and despite a strong start against the euro, the pound fell back below 1.19/ £1. One member – Andrew Sentance – yet again called for a 0.25% rise in interest rates, and some analysts expected that he would be joined by another member calling for increased rates. However, the vote showed that all 7 other members voted for rates (and the emergency funding programme) to be kept on hold for another month. Out tomorrow, there is monthly retail sales data which is expected to show a 0.5% rise. However, this could see an unexpected World Cup related boost. Call in now for a live exchange rate, as rates are likely to be volatile ahead of the GDP figures which are released on Friday.

In the Euro zone, the euro weakened in early trading against both the US dollar and sterling as a bond auction in Portugal was surprisingly undersubscribed. The lower than expected demand saw yields on the bonds jump sharply, which caused investors to sell the euro, as low demand for government debt spooked investors. After the Bank of England minutes were released, the euro recovered against the pound. There was no real data released today in the Euro zone, but tomorrow sees a raft of purchasing manager data and industrial manufacturing data which is expected to show a mild decline. Get in touch now for a live exchange rate and to ensure that you don’t miss out.

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