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Posted October 26th, 2012 by Charles Purdy

GBP/EUR Rates and Comments for 26th October 2012 – Finally some good news for sterling

GBP/EUR – 1.2452

Sterling started the week poorly dropping to a six month low of 1.2245 against the euro and one and a half month low of 1.5905 against the US dollar before rebounding strongly yesterday after better than expected third quarter GDP figures were released. The GDP data came in well above market expectations of 0.6% at 1%, pulling the UK out of recession. Even taking into account the “Olympic effect” these figures are still very encouraging; but, we will have to wait until the fourth quarter GDP figures are released to see if we really are out of the woods. More positivity came from by the Governor of the Bank of England on Tuesday night who indicated that he would hold back on another round of quantitative easing unless it was really necessary. It is a very quiet day on the data front today; but, we will have to see if sterling can maintain the significant gains it achieved yesterday or return to its downward trend against the euro. Please call in for the latest rates and to discuss your requirements with your trader.

The euro had a very strong start to the week following better than expected results at local Spanish elections for the Spanish Prime Minister and news that Ireland had secured an extension on its bailout. The positive trend ended as terrible manufacturing data was released across Europe and that German business confidence has fallen to the lowest level since February 2010. Euro weakness was the result and continued for the rest of the week. The Bank of Spain also said that the Governments budget plans for 2012 were ambitious given that the Spanish economy had contracted by 0.4% in the last quarter and for the fifth quarter in a row. German consumer confidence figures were released first think this morning and the main other release will be the Spanish unemployment rate which will be watched closely by investors as you would expect further increases in the unemployment rate would force the Spanish Government to request a full government bailout. Call in now for the latest news and changes in the euro rate.

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