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Posted December 23rd, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 23rd December 2010

EURO/GBP - 1.1738

In our last Daily Currency Note before Christmas, sterling fell to a 3 month low against the US dollar after a downward revision to the UK’s growth figures for the 3rd Quarter reminded investors how fragile the road ahead is for the UK economy. Figures showed that against an initial estimate of 0.8%, GDP for June to September grew by 0.7% and in thin trading conditions ahead of Christmas, losses on sterling were exacerbated. However, the Bank of England’s minutes showed that policy makers were growing more and more concerned about inflation and as such the possibility of tighter monetary policy in 2011 kept the pound supported. Today is the last day of data, with some mortgage approval figures for the UK – whilst it is Christmas, there is still significant movement possible so call in now for a live exchange rate. We are open for trading until 2pm on Christmas Eve…

In the Euro zone, the euro has seen some strength today after it became clear that China had been buying large amounts of euros to hold in reserve but it still came under pressure on warnings over credit rating downgrades. In particular, a newspaper report in Portugal suggested that Portuguese debt had been bought heavily by the Chinese government. China’s central bank declined to comment though. It is looking like an interesting year ahead for the euro, with European bonds likely to be the big talking point – currently each country issues its own debt, and there has been talk of a centralised ‘Euro-bond’ to help stabilise the region.

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