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Posted September 1st, 2010 by Charles Purdy

EUR/GBP Rate & Comments for 1st September 2010

EUR/GBP – 1.210

Sterling fell across the board on Tuesday as concerns over the global economy sent jitters through financial markets. Sterling dropped to a 5 week low of $1.5327/£1 – breaking through the 200 day ‘moving average’ which means there is likely to be further downward movement. Sterling also hit the lowest level against the Swiss franc since January 2009 and fell significantly against the Japanese yen. The Swiss franc, US dollar and Japanese yen are all ‘safe haven’ currencies and the extent of the demand for these safer holdings shows the level of poor sentiment that is prevalent in the global economy. Despite data showing that UK mortgage approvals increased and consumer credit improved last month, there was a clear feeling yesterday that the best of the UK data has already been seen and it is now a ‘high risk’ currency to invest in. In terms of data released today, there is manufacturing data which is expected to show a mild decline. Call in now to ensure you do not buy when the market has fallen further.

In the Euro zone, the euro also strengthened against sterling by 1.1% to hit 1.2064/£1 which is the highest in roughly 3 weeks. Many traders cited ‘month end’ demand for euro and one UK bank apparently moved a significant amount of sterling into euro which would have had a significant market moving effect. In terms of data yesterday, German unemployment dropped by 2,000 less than expected but Italian data surprised to the upside with retail sales improving by 0.3% and the unemployment rate dropping by 0.1% to 8.4%. Out today there is manufacturing data which is expected to remain the same. Get in touch now for a live price.

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