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Posted April 15th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 15th April 2011

             This week – (Last week)
EURO/GBP 1.1289 - (EURO/GBP 1.1350)

Difficult week for sterling. Following lower than expected inflation data sterling hit a five and half month low against the euro. The reason for the fall in inflation was food prices falling by 1.4% as the supermarkets came under pressure and reduced prices. Other data was mixed. Unemployment fell to 2.48 million but benefit claims went up. Exports increased and the trade deficit narrowed which are again positive. Although the Nationwide consumer confidence survey showed an improvement it still remains at historically low levels. The real problem for sterling is that expectations of increased interest rates are being pushed back. Call in for the latest information and rate.

The euro is still the favoured currency between sterling, the US$ and the euro. As well as hitting a high against sterling it hit a 15 month high against the US$. The major support is the likelihood of further increased interest rates following last weeks 0.25% increase. Also countries such as China are diversifying their reserves of foreign currency with the euro being a major beneficiary. But let’s not forget the problem with government debt. However you try and present it €80 billion is not an insignificant amount of debt that the European Central Bank has to fund as part of the Portuguese bail out. Call in now to take advantage of euros strength.

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