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Posted June 24th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 24th June 2011


Sterling fell below $1.60 against the US dollar for the first time since April 1 and fell below €1.12 against the euro as retail sales figures for the UK fell to the weakest level in a year. This was seen as justifying the Bank of England’s decision earlier in the month to keep interest rates steady and potentially increase stimulus via further Quantitative Easing if needed. In the minutes from the Bank’s meeting earlier in the week, policymakers voted 7-2 in favour of no change to policy and to call on further stimulus if UK growth continued to suffer. PM David Cameron yesterday said that he had received assurances that the UK will not be asked to contribute to a further Greek bailout. On a positive note, UK public sector net borrowing fell by 6% on last year, so at least the government’s plans are having an effect. Mervyn King speaks later today, which could see some movement if he gives any clues on future interest rate policy. Call in now for a live exchange rate. 

In the euro zone, it has been a turbulent week for the region. We saw finance ministers delaying a key tranche of Greek bailout finance pending approval of austerity measures by the Greek parliament. Greek PM George Papandreou had to win a key confidence vote in order to pave the way to enacting tough austerity legislation and there was rioting on the streets of Athens. With Greece essentially bankrupt, there is an assumption that following the vote, a further bailout will be agreed. There is still significant volatility related to the euro exchange rate and bizarrely sterling is floundering against the euro due to interest rates. Call in now to plan a currency strategy and avoid losing out.

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