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Posted July 27th, 2012 by Charles Purdy

EURO/GBP Rate & Comments for 27th July 2012

EURO/GBP 1.2758

A mixed week saw sterling reach fresh 2.5 year highs of €1.2875/1 against the euro before weakening off after global risk appetite increased and appalling UK GDP data was released which saw sterling strengthen by nearly 2.5cents against the US dollar yesterday. The preliminary GDP figures showed that the UK’s economy contracted by 0.7% when only 0.2% had been anticipated making it the longest “double-dip” recession for 50 years. Some economists feel the figures are likely to be inaccurate whilst others hope the Olympics will help growth in the short term; however, irrespective of both of these factors the fundamental problems still remain and the UK’s economy is extremely weak. With very little data out from the UK today, the markets will look to the US and to news from Europe for influence; so, call in now for the latest news and a live quote.

The euro had an extremely poor start to the week reaching historic lows against a raft of currencies before rebounding in the later stages following comments made by the European Central Bank (ECB) President on Thursday. The ECB President stated that the “ECB is ready to do whatever it takes to preserve the Euro" and hinted towards more bond buying to drive down the yields on sovereign debt. Following these comments, yields on Spanish and Italian bonds dropped with Spanish bond yields falling below the 7% mark for the first time this week. The markets also reacted positively on Wednesday following one of the members of the ECB suggesting giving the proposed European Stability Mechanism (ESM) a banking license would go some way to help the European debt crises. Earlier in the weak the markets had been extremely risk adverse with fears that Spain may need a full international government bailout and worries over Greece’s ability to convince its creditors that it had done enough to deserve its next tranche of fund of €31.5b. Despite the comments from the President of the ECB, these fears still remain and we will have to see how the situation develops in the up and coming weeks. On the agenda today, German inflation data and Spanish unemployment data will be released. Call in now for the latest news and a live quote.

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