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Posted July 23rd, 2012 by Charles Purdy

EURO/GBP Rate & Comments for 23rd July 2012

EURO/GBP – 1.2854

Sterling had a mixed day on Friday reaching fresh highs against the euro of €1.2865/£1 but weakened against the US dollar after the bailout of the Spanish banking sector was confirmed during the Euro group meetings. Public sector borrowing figures released on Friday were worse than expected with higher public deficit and borrowing; but, this had little impact on the markets with the news from Europe dominating market sentiment. The main data released this will be the preliminary GDP figures which are expected to show the market contracted by 0.2% confirming that the UK remains in recession. Call in now for the latest news and a live quote.

The euro had an extremely poor day on Friday weakening to fresh 3.5 year lows against sterling, a 2 year low against the US dollar, a 12 year low against the Japanese yen and a record low against the Australian dollar after the announcement that Spanish banking industry bailout had been approved by the EU finance ministers. This market reaction is the opposite to what happened when the bailout was first proposed which saw the euro strengthen and may well have been due to the lack of details outlined. Further worries from Spain came as Spanish officials suggested that the economy would not be out of recession until 2014 and that the region of Valencia is preparing to ask for a bailout from the central government. This negativity saw Spanish benchmark 10 year bond yields rise to record high of above 7.2% whilst the spread between German and Spanish 10 year bonds also hit a record high which highlights the concerns of investors’ with the evident flight to safety. Out this week, German business climate sentiment figures are announced and services and manufacturing Purchasing Managers’ Index (PMI) figures across Europe will be released; however, the main focus will remain firmly on Spain and Greece once more as investors begin to worry about its ability to pay back its debt. Call in now for the latest news and a live quote.

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