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Posted February 21st, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 21st February 2011

EURO/GBP - 1.1861

Sterling hit a 2 week high against the US dollar on Friday as retail sales in January came in far higher than expectations. After a disappointing Christmas period, and with January retail sales normally coming in lower, the rise of 1.9% encouraged investors to back the pound. Sterling’s fortunes are very much linked to inflation and interest rate expectations. Higher retail sales figures left many feeling that the Bank of England will need to address the 4% inflation level far sooner than current rhetoric is suggesting. Out this week we have the Bank of England’s minutes that will be closely watched for any hint of timescales for an interest rate hike, so call in now for a live exchange rate.

In the euro zone it was a similar story with the single currency breaking above $1.37 against the US dollar to post the first weekly gain since late January. The euro’s strength came as European Central Bank policymaker Lorenzo Bini Smaghi said that the ECB would hike interest rates if price pressures continued to grow. As in the UK, this saw increased speculation over rate hikes in the region and the single currency strengthened. Out this week we have a wide array of European data so call in now for a live price as we could see some volatility.

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