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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 is best to get all the bad news over quickly rather than dragging it out and prolonging uncertainty and undue suffering. So the new Chancellor laid out a very clear plan of action stating what was going to be done and how. The financial markets initial reaction has been positive which is important to sterling’s stability in the currency market as we have to remember that lenders to this country have to be convinced that we will be able to service our debt longer term. Sterling has gained against both the euro and the US$. The one unknown is what the effect of the cuts in expenditure, the increased VAT and austerity measures elsewhere in the world will have on growth in the UK economy, but the belief is that we will avoid a double dip recession. So we have taken a small step forward but the level of uncertainty is still high and that is why it is important to get in touch now and minimise the chance of losing out.

The euro zone is still suffering. On Monday we had the head of the Bank of France state that certain banks were beginning to find increased funding problems. This is what happened before Lehman Brothers went bust. The reason given is that the European Central Banks 12 month loan facility totalling 442bn comes to an end this month but this is to be replaced with a similar sized stabilisation facility so we should see this pressure ease. We also saw some downgrading of some French banks credit ratings which also knocks confidence in the euro zone and the euro which continues to weaken.

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Posted June 14th, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 14th June 2010 EUR/GBP – 1.204 Sterling fell sharply against the euro and US dollar on Friday afternoon as weak industrial output figures left investors concerned that the UK might slip back into recession. Industrial output was expected to show a rise of 0.4%, but dropped unexpectedly by 0.4%. Manufacturing  Continue Reading…

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