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Posted July 2nd, 2012 by Charles Purdy

EURO/GBP Rate & Comments for 2nd July 2012

EURO/GBP – 1.2404

Lots of activity and data releases this week so expect lots of volatility [i.e. rapid movements in any direction] as the week progresses. Sterling had a poor day on Friday weakening against the majority of currencies and only strengthening against the safe haven currencies as risk aversion returned to the market following announcements made at the EU economic summit. The Barclay’s Bank LIBOR manipulation scandal has sent shock waves through the financial sector with several other banks expected to have been involved which weighted on investors’ confidence in the banks, the financial services and the UK in general. The Bank of England meets this week for its monthly vote on monetary policy. The market expects that the Monetary Policy Committee will vote to keep interest rates on hold at 0.5% and increase quantitative easing by £50 billion in attempt to help the UK’s economy in these uncertain times. Other data out this week includes the manufacturing, construction and services Purchasing Managers’ Indices (PMI) and figures showing the change in the price of goods and raw materials purchased by manufacturers. Call in now for the latest news and a live quote

The euro performed well on Friday due to renewed confidence in the euro zone following the measures the EU economic summit put forward to recapitalize banks directly providing relief for sovereign debt yields and a growth pact of €120 billion. On the data front, worse than expected German retail sales data was released; but, it had very little effect on the market. This week the bench mark 10 year Spanish bond auction will highlight the confidence, or lack of confidence, investors’ have in the nation. The key event though seems to be the European Central Bank interest rate decision which is set to be a key market mover. At present, the markets anticipate the central bank to cut interest rates by 25bps to 0.75%, if this happens; or, if a different decision is made it could cause a lot of volatility in the market; so, call in now for the latest news and a live quote.

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