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Posted July 9th, 2012 by Charles Purdy

EURO/GBP Rate & Comments for 9th July 2012

EURO/GBP – 1.2592

A mixed week for sterling last week and I suspect this week will be no different. Sterling gained ground against the euro pushing through the €1.26/£1 level on Friday, a rate last seen three and half years ago, as the European Central Bank reduced interest rates. Sterling lost ground against the US$ as the likelihood in some investors eyes of further US quantitative easing receded on the back of reasonable US non-farm payroll figures released on Friday. Tuesday is the main day for the release of UK data this week. Industrial and manufacturing data for May will be released as will the trade balance for May. Expectations are for a slight narrowing but will still be a £9 billion outflow. I suspect events elsewhere will be the main drivers of sterling exchange rates. Call in now for the latest update.

Similar data is released in Europe this week and the data is expected to show the continuing decline in activity and the growing recession in the Euro zone. Trade balance data is going to highlight the disparity between the different countries with Germany expecting an inflow of €13 billion. Quite a contrast to the UK and highlights the might of the German economy. The key driver of the euro’s weakness is the yields on Spanish and Italian debt and these will be watched very carefully this week and if they hit the 7% level we could see further weakness from the euro against all currencies. Don’t get caught out by the uncertainty – call in now for the latest rate.

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