Sterling gained against a broadly weaker euro yesterday after a European Union deal to support Greece was seen short on detail, but stayed weak versus the dollar as a dovish Bank of England report weighed on sentiment. Rates climbed significantly, as you can see from where they stand @ 08:30am
- GBP/EUR 1.1531
- GBP/USD 1.5705
- GBP/AUD 1.7658
- GBP/NZD 2.2491
- GBP/CAD 1.6484
- GBP/CHF 1.6874
- GBP/HKD 12.201
- GBP/NOK 9.2848
- GBP/JPY 141.58
- GBP/ZAR 11.986
- EURUSD 1.3616
Investor optimism after EU leaders announced the Greek rescue plan pushed the pound to a three-week low versus the single currency.
However, the euro turned lower across the board as markets awaited official details of the deal.Sentiment towards the pound remained shaky and it stayed weak against the dollar as Wednesday’s BoE report suggested the door remained open to more asset purchases under quantitative easing and that rates would stay low for some time.
The pound was also expected to stay under pressure in the medium term on political uncertainty ahead of an election due by June, and on concerns that ratings agencies may downgrade the UK’s sovereign debt rating.
BNP Paribas analysts said the BoE’s contentment with a weaker pound would also merit holding on to short positions versus the U.S. dollar.
Summary for Euro buyers
In my view, this gain against the Euro is purely to do with uncertainty over the Greek deal, and will not last. We’ve seen a 2 point gain in less than 24 hours, which is a huge spike in such a short time.
This will probably be short lived due to the reasons above regarding Bank of England, Quantitative Easing and the looming election.
Euro buyers should consider locking in the rate with a forward contract. At todays rates, a €150k purchase is nearly £3k cheaper than yesterday. Contact us today to discuss forwards by clicking the links below.
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