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Posted July 29th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 29th July 2010

EUR/GBP – 1.198

Sterling breached the $1.56/ £1 barrier as investors ignored downbeat comments from the Bank of England Monetary Policy Committee after a run of better than expected UK data. The pound continued to ride the wave of strong GDP and better than expected retail sales data and this saw investors treat sterling with optimism. Bank of England governor Mervyn King warned that strong second quarter growth data should not mean that monetary policy should tighten up; pointing out that significant risks still face the UK economy and that interest rates could drop further if needed. The pound shrugged off these comments and continued to strengthen against the US dollar after poor data from the USA left investors feeling happier holding sterling. Out today there is key house price data and lending data. Call in now as this could take the edge of the pound’s strong run.

In the Euro zone, the euro weakened against sterling marginally and the pound briefly broke through the 1.20/£1 barrier before falling back off. Data from the euro zone showed that German inflation remained the same at 0.2%. Out later today, the key European data released is German unemployment figures which are expected to show an improvement, but not at the same rate as last month. There is still concern from some analysts that the euro is far too overvalued following the heavily criticized stress tests. Get in touch now to avoid losing out if the pound does jump.

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