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Posted December 21st, 2012 by Charles Purdy

Smart Daily Currency Note | Christmas spirit favours the euro, will this last?

GBP/EUR – 1.2308

Overall it has been a reasonable week for sterling. Although it touched a two month low of 1.224 against the euro, it has made strong gains against other major currencies. Wednesday saw sterling buy more dollar than at any point since September, hitting 1.6307, although this can probably be put down to dollar weakness in the shadow of the fiscal cliff as opposed to any particular strength for sterling. The most important news release were the minutes from this month’s monetary policy committee meeting. Although all 9 members remained unanimous in holding interest rates, they were less than positive about the economic outlook and one member voted in favour of increased quantitative easing. Today the office of national statistic publishes two important pieces of data; the current account and the public sector borrowing data. Both of which were considerably worse than anticipated last month. Current forecasts are not particularly positive, but markets will react nonetheless if the results exceed expectations and with thin trading volumes at the moment any movement could be amplified and become significant. Get in touch now for the most up to date rates.

The euro performed well all week, strengthening against its major peers and reaching eight and two month highs against the US dollar and sterling respectively. This was down to positive data coming out of Germany with improved business sentiment and the President of the European Central Bank (ECB) remaining positive about the future of the Eurozone, as well as another member of the ECB stating that he did not see the need for interest rate cuts. Greece also helped improve euro sentiment receiving its next bailout tranche, and news that Standard and Poor’s had improved Greece’s credit rating from selective default to B-. Today sees the release of very little news released from the Eurozone, with just German Consumer Climate data being released. Many eyes will remain fixed on the United States, with any news around the current fiscal uncertainty likely to impact the euro. Call in now to get the latest news from your trader.

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