Pound / Euro at one month high

Good Morning. Pound Euro rates rose yesterday after fears over the Austrian banking sector weakened the Euro, making it cheaper to purchase. The pound is still weak though, and exchange rates to other currencies such as the US Dollar dropped. Rates @ 08:30am are :

  • GBP/EUR 1.1185
  • GBP/USD 1.6260
  • GBP/AUD 1.8132
  • GBP/NZD 2.2690
  • GBP/CHF 1.6919
  • GBP/NOK 9.4279
  • GBP/CAD 1.7254
  • GBP/ZAR 12.074
  • GBP/JPY 145.74
  • EUR/USD 1.4537

Weak Euro
Oesterreichische Volksbanken, Austria’s top cooperative bank, was on a regulator’s watchlist at risk of nationalisation yesterday. Worries over Austrian banks slammed the Euro to its lowest in more than two months against the dollar and lowest against the pound in a month. investors then sold the Euro, mostly against the US Dollar, which weakened the Euro and caused pound euro rates to climb. Pound to Dollar rates dropped.

UK Inflation
UK inflation picked up pace in November, driven largely by higher petrol prices, official figures show. The consumer prices index (CPI) rose faster than expected to an annual rate of 1.9%, compared with 1.5% in October. The currency markets reacted little to the news however, with Euro selling causing the rise in rates. The pound actually dropped through the day.

Economists said the pick-up in UK inflation was due to base effects and temporary factors but could still go further in the coming months, although underlying spare capacity in the economy should mean the BoE maintains an accommodative policy stance. This means they will keep the option open of more Quantitative Easing which will keep pressure on the pound.

However in contrast, Sterling actually clawed back some ground against the USD late in the day after a Bank of England policymaker said concern over asset prices getting out of line was a key reason for caution about future extension of quantitative easing.

Today’s Data
Aus – Gross Domestic Product
UK – Average Earnings
UK – Unemployment
UK – Jobless Claims
EU – Consumer Price Index
US – Building Permits
US – Consumer Price Index
US – Interest Rate Decision

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