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Posted January 20th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 20th January 2011

EURO/GBP - 1.1867 

Sterling slipped yesterday against the euro and US dollar dropping from the highs seen on Tuesday after UK inflation came in much higher than expected. Jobless claims dropped by 4,100 in December against an expected rise of 1,500 but analysts were very weary of a poor labour market in the next few months as public sector job cuts are set to take effect. Despite dropping below $1.60/£1, sterling remained up 0.1% on the day against the US dollar but fell 0.6% against the euro as the single currency got a boost from expectations that European officials will be able to navigate through the debt crisis and find a more long term solution. Sterling is likely to remain well supported against the major currencies after much higher than expected inflation figures on Tuesday – out today we have industrial order expectations, so get in touch now for a live exchange rate.
 
In the euro zone, the euro had a strong day yesterday and hit a two-month high against the US dollar overnight on expectations that policymakers in the region would put a more long term plan in place to solve the debt crisis. In addition, rumours that banks in Asia would look to hold euros also helped boost the euro. There has been a spate of ‘short covering’ where investors who were hoping to profit from a falling euro have bought back the currency – again, boosting the strength. Today, there is European consumer confidence data and we have already seen German PPI data come in better than expected.

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