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Posted December 17th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 17th December 2010

EURO/GBP - 1.1749

Sterling climbed against the US dollar and euro yesterday after UK retail sales data for October was revised upwards and inflation expectations continued to rise. November retail figures came in slightly lower than was expected, but consumer inflation expectations showed that many expect nearly 4% inflation in the coming months. Having dropped by 1.5% against the US dollar on Wednesday, sterling recovered but many analysts believe that a recovery above $1.57/£1 will simply see profit taking and as such sterling is likely to remain in a tight range against the US dollar. The inflation figures will put the Bank of England in a tough position, with soaring inflation and higher than expected unemployment figures. There is uncertainty about the impact of the austerity measures on growth, so the New Year is going to be interesting on that front.

In the Euro zone, the euro fell against the other major currencies as the European Summit of European ministers got underway. The aim is to resolve deep divisions amongst euro member states over the best way to resolve the debt crisis and avoid further countries from requiring bailouts. Germany has been keen to avoid footing the bill for anymore bailouts and until resolution is found, there is likely to be a lot of concern still. Spain held a bond auction and had to pay higher interest rates than last time after credit rating agency Moody’s stated that it would amend its outlook for the country’s debt. Call in for a live exchange rate.

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