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Posted May 24th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 24th May 2011

EURO/GBP - 1.1462

Sterling hit a 2 month high against the euro yesterday as Bank of England Chief Economist Spencer Dale said in an interview over the weekend that Bank of England policy makers should increase interest rates to avoid damaging the UK economy. Sterling benefited from euro weakness, but this increased risk aversion and saw the pound fall by 0.7% against the US dollar to hit a low of $1.6087/£1 as investors cut exposure to riskier assets. One currency analyst did feel that sterling had been oversold against the US dollar, and as such there could be some upside against the US dollar in the coming weeks. Out later today, we have public sector borrowing figures, which could see some movement so speak to one of the team for a live exchange rate.
The euro fell broadly yesterday, hitting a two-month low against the US dollar and sterling as concerns grew over a potential restructuring of Greek debt. After a flurry of credit rating downgrades over the last few days, rating agency Fitch yesterday cut its outlook for Belgium to negative. The euro hit a record low against the Swiss franc, with more losses expected on fears that the euro zone debt crisis is getting worse, with doubts over Spain’s austerity measures also emerging as the ruling party lost out in key regional elections. This current bout of the debt crisis has the potential to cause some serious issues, so ensure you cover yourself to avoid any adverse market movements.

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