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Posted October 19th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 19th October 2010

EURO/GBP – 1.138

Sterling fell against the US dollar yesterday, coming off 8 ½ month highs as investors became concerned that the widely anticipated 2nd round of Quantitative Easing in the USA (known as “QE2”) would not be as aggressive as first thought. This saw investors reversing so called ‘short positions’ (i.e. bets against the US dollar) in order to protect themselves if the reality is more upbeat than sentiment currently suggests. The movement saw sterling eradicate gains it had made after data showed that house prices had risen for the first time in 4 months. Despite this, sterling remains vulnerable ahead of Wednesday’s “perfect storm” of data – with the Government’s spending review and the Bank of England’s minutes released. The Bank minutes are expected to show a 3 way split on monetary policy – the kind off uncertainty that will not make investors confident. Whilst there may be an element of this that is already priced in to the sterling price, there is still scope for significant volatility. Call in to speak to one of the team about minimising your outlay on your next payment. 

In the Eurozone, it was a relatively quiet day for data in the region, with the major release coming on Thursday in the form of business surveys for manufacturing and services data. The single currency traded on sentiment, and similar to sterling, the euro slipped against the US dollar for the second day running as investors scaled back expectations over the scale of the Federal Reserve’s intervention. There is key economic sentiment data out for Germany later today. As the region’s largest economy, this can have a significant impact. Call in now for a live exchange rate.

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