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Posted February 22nd, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 22nd February 2011

EURO/GBP - 1.1920

Sterling hit a high of $1.6260/£1 yesterday, but struggled to push much higher as investors took profit from sterling’s recent run against the US dollar. Positive comments from a key Bank of England policymaker helped support sterling, as Martin Weale (who voted for an interest rate hike last month) stated that a small interest rate rise now would reduce the need for a large rise at a later date. Whilst the prospect of an interest rate hike helped support sterling, markets are waiting for Wednesday’s Bank of England minutes to see if any other of the 9 strong committee joined Andrew Sentance and Martin Weale in voting for an interest rate hike this month. It is worth noting that a lot of the current interest rate hike speculation is already ‘priced in’ (i.e. reflected in the exchange rate already) and as a result, there could be no real movement. We are at the highest level against the US dollar for nearly a year, so it is a good time to take advantage.

In the euro zone, the euro slipped yesterday following risk aversion relating to the escalating tensions in the Middle East and North Africa. In times of geo-political turmoil, investors generally look to safe haven currencies. As a result, the Swiss franc has seen some strength against the euro today. However, the euro did see some support from strong fundamental data, with German business confidence hitting a record high and purchasing managers’ data beating expectations. Call in now for a live exchange rate.

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