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Posted October 28th, 2011 by Charles Purdy

EUR/GBP Rate & Comments for 28th October 2011

EURO/GBP - 1.1356 

Sterling hit a 7 week high against the US dollar but dropped by around 1.5% against the euro as European leaders struck a deal on the euro zone debt crisis. The agreement saw risk appetite improve significantly and investors look to invest in the euro again. Sterling’s underperformance against the euro has been put down to a recent run of investors reversing ‘safe haven’ holdings in sterling as UK data underperformed and the Bank of England announced a 2nd round of Quantitative Easing. Sterling had held steady all week against the euro as investors awaited the results of the EU summit, however the announcement that came early 7 yesterday morning saw a large swing of volatility. One upside for sterling is that it may strengthen towards $1.63/£1 against the US dollar – call in now for a live exchange rate.

In the euro zone, the euro surged by 2% against the US dollar as investors traded on the optimism of the announcement of a solution to the euro zone debt crisis. After a night of deadlocked talks, markets hardly reacted at all, but when the US markets opened, the euro made ground breaking above $1.41/€1, coming within touching distance of $1.42/€1. Stock markets rallied around the world on the market optimism. Some analysts however are less than optimistic pointing to the lack of detail on implementation of the plan.

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