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Posted January 5th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 5th January 2011

EURO/GBP - 1.1770

Sterling gained yesterday as manufacturing data showed that activity in the sector grew in December at the fastest rate in 16 years. The Purchasing Manager’s Index (a survey in which purchasing managers are asked about their company’s buying) shot to 58.3 – the highest since September 1994 and beating expectations of a figure of 57. Clearly this shows that the necessary shift is taking place in that the UK economy is moving from an economy driven by consumer debt and credit to an economy that actually produces tangible products, and as such it was a positive day for sterling. The pound was up by around 1% against the US dollar and euro, hitting a high of $1.5643/£1 and breaking back over the €1.17/£1 mark after hitting 7 week lows against the euro last week. Out today, there is construction activity data which could provide a boost if it beats expectations. Call in now for a live exchange rate.

In the Eurozone, the euro fell from 3 week highs against the US dollar yesterday after stronger than expected US manufacturing figures gave traders no reason to hold the single currency. In addition, many investors are concerned over bond issuance in the region as January is notoriously a time when many countries push through a large percentage of their debt funding requirements for the year to ‘front load’ their borrowing. Given the current climate, countries such as Portugal and Spain will have to pay more and more for their debt potentially pushing them towards a similar funding to Ireland and Greece. It will certainly be an interesting month so get in touch with one of the team now to ensure you don’t lose out.

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