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Posted October 19th, 2012 by Charles Purdy

GBP/EUR Rates and Comments for 19th October 2012 – Euro reaches fresh highs against sterling and the US dollar

GBP/EUR – 1.2278

Sterling struggled against the majority of currencies this week and in particularly against the euro dropping to a four month low of 1.2275. It did reach 1.6175 against the US dollar as risk appetite drove the market but these gains have since been reversed. Inflation has reached its lowest level for almost 3 years in the UK dropping to 2.2% which put pressure on sterling. On a positive note unemployment data released showed that 4000 less people has applied for unemployment benefits during the past month and the overall unemployment rate had dropped by more than expected to 7.9%. Moreover, retail sales data released yesterday was better than expected with last month’s figure revised up to -0.1% and this month’s figure showing growth of 0.6% when only 0.4% had been expected. Public Sector Net Borrowing figures will be the key UK economic data released today, but, the main focus will be on the EU Economic Summit and any significant news that comes from it. So please call in for a price and to discuss the markets with your trader.

The euro performed well all week reaching fresh highs of 1.31 against the US dollar and 1.2275 against sterling thanks mainly due to increased market confidence in the Eurozone through a combination of improved German economic sentiment and increased speculation of a Spanish bailout. Furthermore, Moody’s (one of the big three credit rating agencies) announced that Spain was keeping its investment grade credit rating, which eased concerns surrounding the country and the region in general. Yesterday the EU summit started and will run through today with Germany and France, the two main powers of Europe having clashed over greater EU control of national budgets moving towards a single banking supervisor. Also in the near-bankrupt Greece, police clashed with protestors during the strike which has brought the country to a standstill. The markets will keep a close eye on the EU summit today and any significant news could cause a lot of volatility, so call in now for the latest news and changes in the euro rate.

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