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Posted July 6th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 6th July 2011

EURO/GBP - 1.1111

Sterling strengthened against the US dollar and euro yesterday after stronger than expected UK services sector activity data came in better than expected, although further gains looked limited by an overall gloomy outlook for economic growth. Recovering from a 3 month low in May the services PMI data saw sterling jump a cent against the US dollar to hit a session high of $1.6128/£1 beating forecasts of a fall to 53. Recently, poor economic figures had seen investors reduce bets on a stronger pound, so this news came as a welcome surprise. However, the Bank of England is still expected to keep its main rate unchanged at 0.5% on July 7 when it announces its next monetary-policy decision. Out today, there is house price figures so call in now for a live exchange rate.

In the euro zone, the euro dropped for the first time in seven days against the US dollar after credit rating agency Moody’s said that banks rolling over Greek bonds into new securities may incur impairment charges. There is a lot of head scratching going on as to the best way to support Greece and many prospective plans are being shot down by rating agencies. The euro also slipped against the safer haven currencies on concerns over China. Later this week, the ECB is forecast to raise interest rates. Call in now for a live exchange rate.

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