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Posted July 12th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 12th July 2011

EURO/GBP - 1.1388

It was a volatile day for the pound yesterday as sterling fell to a 5 month low against the US dollar and hit a 3 month low versus the yen as investors looked for safer haven currencies on fresh concerns over the euro zone. Sterling dropped to $1.59/£1 against the US dollar, but surged against the euro, hitting a high of €1.1368/£1 as investors dumped the euro on concerns that Italy may be next in the queue for an ECB bailout. Out later today there is consumer price inflation data which is likely to show inflation creeping up, which will put mounting pressure on the Bank of England to tighten monetary policy. However, current rhetoric suggests that this will not happen until early 2012 at the earliest. Call in now for a live exchange rate.

In the euro zone, the euro plunged yesterday as concerns grew that the debt crisis in the region could spill over into Italy. In an emergency meeting of European finance ministers, policymakers were meeting to come up with a plan for a second Greek bail out. A Financial Times report that some European leaders would consider letting Athens default on some of its bonds added to market anxiety. The risk of contagion – i.e. the crisis spreading to Italy – was the key driver though and this saw other peripheral bond yields jump. Call in now for a live exchange rate.

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