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Posted May 23rd, 2013 by Charles Purdy

Sterling stumbles and starts to fall | Smart Daily Currency Note

GBP/EUR – 1.1698

Sterling tumbled on Wednesday in most of its major pairings – reaching seven week lows against the US dollar – stemming from poor retail sales data released yesterday morning and following the lower inflation levels from Tuesday. The UK currency struggled across the board despite making up some ground against the euro late on after retail sales dropped 1.3% due to a wet and cold winter; confounding expectations for a flat reading. Although the Monetary Policy Committee meeting minutes revealed that the Bank of England Governor Mervyn King was outvoted 3-6 again against expanding quantitative easing, speculation that incoming Governor Mark Carney will expand the asset purchase programme over coming months in light of lower inflation has contributed to sterling’s weakness. This could be the start of another period of market negativity towards the UK currency, though Business Investment data and importantly GDP figures released today will be helpful if growth stays in line with expectations. Call in today for the latest market reaction to UK developments from this morning onwards.

The euro had a mixed day yesterday, with characteristically volatile price movement despite little data being released. Reaction to disappointing retail figures in Britain drove euro to a four-week high against sterling, though the seventeen-nation currency fell by over a cent against the US dollar in the afternoon following news from the Federal Reserve. European Union ministers continue to promote that unemployment and sluggish growth will be combated as a matter of urgency so the central bank will be under pressure to further support monetary union in touch economic and political times for the region. This morning sees the release of manufacturing and services PMI figures from the French and German core of the Eurozone where economists forecast a slight improvement on the previous month’s data, though this is unlikely to be enough to inspire confidence regarding wider economic health from the heart of the Eurozone. Get in touch for the latest rates and on-going news today.

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