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Posted June 29th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 29th June 2011

EURO/GBP - 1.1171

Sterling fell against the euro yesterday, hitting an 8 week low, after Bank of England policymakers opened the door for further Quantitative Easing suggesting that the Bank is sticking to its guns on inflation forecasting which it has argued for some time will spike this year before falling off. This left investors even more convinced that interest rates will remain at record lows well into next year. Sterling also touched a 5 month low against the US dollar before closing the day barely above $1.60/£1. In addition, the UK’s 1st Quarter annual GDP was revised downwards to 1.6% from 1.8% which was a reminder of how slow the UK recovery is. Out today we have mortgage approval data and consumer confidence numbers so call in now for a live exchange rate.

In the euro zone, with markets in a holding pattern awaiting a key vote in Greek Parliament to approve austerity measures and pave the way for key funding, investors chose to focus on a press conference with ECB President Jean-Claude Trichet. Trichet stated that the bank is in “strong vigilance mode,” signalling that the ECB plans to increase interest rates in the region next week. As a result, the euro strengthened against both the US dollar and sterling which many will find baffling given the sheer state that Greek finances are in. The all important Greek vote takes place today and tomorrow, so call in now for a live exchange rate. 

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