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Posted March 27th, 2013 by Charles Purdy

A quieter day for currencies | Smart Daily Currency Note

GBP/EUR – 1.1808

Sterling eased from close to a six week high against the euro and dropped against the US dollar yesterday, as a timely reminder to investors about Britain’s cloudy economic forecast came in the form of the CBI’s sales report. Indeed, the country’s flat retail sector had a noticeable effect with sterling dipping to 1.5135 after the report which described flat trading volumes throughout March. Furthermore, some analysts feel that sterling has been somewhat “overbought” recently following the scraps of positive economic data in Britain and the problems in the Eurozone; as a result, the theory is the underlying problems in the UK are now resurfacing and in turn could push sterling lower. The disparity in economic prospects compared to America means sterling will struggle against the US dollar as the recovery in the US starts to solidify. The Federal Reserve could stop purchases of further assets later this year, but in contrast the Bank of England is likely to instigate another wave of quantitative easing given the government has meagre fiscal leverage with its austerity commitments. Out today we have the final GDP reading for the fourth quarter of 2012 which is expected to show a contraction of 0.3% and current account figures which are forecast to show the trade gap has widened yet again. Call in now for the latest update from your trader.

It was a much better day for the euro yesterday, but only to the point that it didn’t lose any further ground against its major trading partners after reaching a four month low against the US dollar. This increased stability came as the Cypriot Finance Minister played down talk of an unprecedented exit from the Eurozone. Those banks which have survived are expected to reopen tomorrow, but be subject to capital movement limitations – in theory temporarily – to prevent all capital flooding out of the country. With little data released today, it will continue to be Cyprus dominating the landscape, with markets still weighing up the precedent value of the bailout. The Italian bond auction will serve as a very good barometer of opinion, expect the euro to remain weak as long as it appears as unstable a prospect as it does at the moment. Get in touch today for up to the second pricing, and the latest news.

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