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Posted December 20th, 2012 by Charles Purdy

Smart Daily Currency Note | Euro strengthens, US dollar weakens

GBP/EUR – 1.2284

During the course of yesterday sterling reached a three month high against the US dollar peaking at 1.6307; but, dropped to a two month low of 1.2240 against the euro. The Monetary Policy Committee meeting minutes revealed the members voted 8-1 against an increase in quantitative easing with one member voting for a £25 billion increase as risks from the Eurozone crisis is easing and inflation danger is persisting. The Bank of England did say however that the strength of the pound had been damaging the UK economy, which led some to believe the central bank is eyeing up another round of quantitate easing in an attempt to weaken sterling and boost exports. As expected, all members of the MPC voted to keep interest rates on hold at 0.5 per cent. Key data released today will be the monthly report on UK retail sales. As always, this will provide us with an early look at consumer spending levels in the run up to Christmas, and in turn a good idea of the overall economic activity in the UK, so call in and find out which way will this has influenced sterling today.

The euro strengthened yesterday and reached an eight month high against the US dollar of 1.3307 based on positive data from Germany. Europe’s largest economy looks set to overcome recent troubles as German business sentiment again beat expectations. This was accompanied by positive thoughts regarding Greek debts across the Eurozone resulting. There is not much data out of Europe today and although we have seen some weakness for the euro overnight against both the US dollar and sterling, the euro’s recent strength has seen it pushing key resistance levels against major currency partners. We will have to see if it can break through and if so, how far it can go. Call in now for the latest update and a live rate.

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