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Posted September 23rd, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 23rd September 2010

EUR/GBP – 1.168

Sterling fell to a 4 month low against the euro yesterday of 1.1662/£1 and a 2 month low against a basket of major currencies after the minutes of the Bank of England’s recent interest rate meeting showed that the Monetary Policy Committee were more willing to consider a fresh round of Quantitative Easing. Members voted 8-1 to hold rates with Andrew Sentance yet again standing alone in his call for an interest rate hike of 0.25%. The general consensus was that there were risks on both sides and stood ready to respond in either direction, with many feeling that it was more likely that they would need to inject further stimulus in the coming months. There was one upside today for sterling. The pound jumped against US dollar early this morning and broke the $1.57/ £1 barrier but this was more a function of a relatively weaker US dollar than sterling strength. Out today we have mortgage approval data which is expected to show a decline. Speak to a member of the team to protect yourself in case sterling drops even further.

In the Euro zone, the euro benefited from the prospect of further monetary stimulus in both the UK and the USA after the Federal Reserve left the door open to pump money into the economy if required. The euro saw a boost earlier in the week when Irish and Greek bond auctions saw higher demand than expected. With investors concerned over the UK and the US recoveries, the euro surged to a 5 month high of $1.3437/1 and a 4 month high against sterling of 1.1662/£1. Out later today there is a raft of Purchasing Manager Index data for France, Germany and Europe as a whole. Ensure you are taking advantage of this volatility – especially if you need to move euros into sterling. Speak to a trader today about fixing your budget into the next year.

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