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Posted August 28th, 2012 by Charles Purdy

EURO/GBP Rate & Comments for 28th August 2012

EURO/GBP – 1.2632

Sterling had a poor day on Friday as revised GDP figures came in as expected showing a marginal improvement from the preliminary figures which were revised from -0.7% to -0.5%. In other news, one of the members of the Bank of England suggested that in the event of further loosening in monetary policy, a rate cut would be preferred over additional quantitative easing which was negative for sterling. Other data released showed that the Preliminary Business Investment figures were well below market estimates. A quiet week for the UK follows yesterday’s bank holiday with little significant data released. As it is the final week of the summer holidays we should expect trading volumes to stay low but with so much uncertainty in Europe and heightened expectation in the US there is still the potential for a lot of volatility. Call in now for the latest rates.

The euro had a turbulent day on Friday as once again markets continued to speculate whether or not the European Central bank (ECB) will intervene in Government borrowing costs by capping bond yields and this is despite the ECB stating it would wait until after the German court ruling on the European Stability Mechanism (ESM). Some confidence was restored into the Eurozone after Germany’s Chancellor stated that she wanted Greece to remain in the Eurozone and that she is working to make this so; however, made no suggestion was made that any extensions or amendments to the Greek bailout package would be given. Yesterday, German business climate sentiment figures came in below market estimates and the main other release this week will be the Italian benchmark 10 year bond auction on Thursday, whilst the ECB president will also be speaking on Saturday. Call in now for the latest news.

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