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Posted June 24th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 24th June 2010

EUR/GBP – 1.218

Sterling hit a 6 week high against the US dollar of $1.4999/£1 after sentiment was given a large boost. Firstly, following the emergency budget on Tuesday, credit rating agency Moody’s stated that the UK will retain the AAA credit rating if it successfully implements Tuesday’s measures. In addition, investors were in for a shock when the Bank of England’s minutes for this month’s meeting on monetary policy showed that one of the Bank members voted for a rise in interest rates – the first time for over 2 years that anyone has voted for a rate hike. With VAT set to rise to 20% and a round of tough spending cuts, the affirmation from Moody’s should ease investor concern over the UK. As a result, the pound saw a welcome boost. However, many analysts said that whilst the rise was justified, there are still genuine concerns over the possibility that the cuts and tax hikes could stifle out growth. As a result, many expect that the pound will not have the momentum to push far past $1.50/ £1 for some time. Get in touch now to take advantage of the best price in 6 weeks.

In the Euro zone, the euro fell against the pound as investors flocked to sterling. The pound hit 1.2189/ £1 at one point yesterday. Sentiment towards the euro is still poor, as Portugal announced that borrowing from the ECB by banks in the country doubled in May to a new record level. Banks in the region are having to borrow directly from the central bank, as they face difficulties borrowing on the ‘interbank’ market. The interbank market is where banks borrow money on a short term basis (e.g. overnight) to pay obligations. Due to poor sentiment in the region, the interest rates for overnight lending are prohibitively high and banks are going to the central bank for financing. Out today, we have some retail sales and industrial data – call in now for a live exchange rate.

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Posted June 23rd, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 23rd June 2010 EUR/GBP – 1.209 Yesterday we had the first budget from the new coalition government. The reality of the budget was very much as expected given the huge hole in the public finances and the need to match income to expenditure. And it is often stated that it  Continue Reading…

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