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Posted January 20th, 2012 by Charles Purdy

EUR/GBP Rate & Comments for 20th January 2012

EURO/GBP - 1.1962 

Sterling strengthened against the US dollar yesterday tracking gains by the euro against the US currency after strong demand at a Spanish bond auction saw improved risk appetite. Sterling however dropped below €1.20/£1 against the euro as a survey showed that consumer confidence in the UK fell to the lowest level for 7 years, which increased concerns over the fragile recovery and increased the chances that the Bank of England would look to increase Quantitative Easing as early as next month. Lower inflation earlier in the week had added to this viewpoint also so call in now to avoid losing out.
 
In the euro zone, it has been another turbulent week with the euro making somewhat of a recovery against its major counterparts as bond auctions and data have come in better than expected. So far the single currency is on track for the biggest rise against the US dollar in 3 months. One potential stumbling block this week has been Greece’s renegotiations of its bond repayments. If these talks break down yet again then Greece is likely to have a ‘disorderly’ default as opposed to the carefully managed one that is being attempted at the moment. 

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