Pound goes up vs Euro due to Greek debt

16th June 2011
Good morning. Sterling fell against all currencies except the Euro yesterday, after poor jobs data and slow wage growth added to the view interest rates are going nowhere in the near term. The Euro however weakened significantly on Greek debt concerns, pushing GBP/EUR rates through the €1.14 level. At 08:30am this morning rates are as follows:

  • GBP/EUR 1.1433
  • GBP/USD 1.6157
  • GBP/AUD 1.5326
  • GBP/NZD 2.0103
  • GBP/CAD 1.5854
  • GBP/CHF 1.3757
  • GBP/ZAR 11.042
  • GBP/JPY 130.20
  • GBP/HUF 305.72
  • GBP/DKK 8.5248
  • EUR/USD 1.4131

Weak jobs data hurts Sterling

Yesterday the office for national statistics (ONS) showed that more than double the amount of people claiming jobless benefit that forecasts had suggested. This shows that the UK recovery is still on very shaky ground, and as a result Sterling dropped against nearly all major currencies.

Sterling Euro rates rise

Against the Euro however GBP/EUR rates rose due to fears over Greek debt. It’s to do with the EU banking system; Moody’s the ratings agency said it was going to review the ratings of French banks, due to their holding of Greek debt. This weakened the Euro significantly, pushing exchange rates up despite the fact that the pound weakened yesterday.

Pound vs US Dollar

Inflation rose in the US last month, and this pushed market sentiment up strengthening the US Dollar. This compounded the weak pound and GBP/USD rates have fallen sharply into the $1.61’s.

Today’s data

The main data is UK retail sales, which if poor could hurt the Pound. We also have various inflation measures from the EU, so we think the gains in GBP/EUR will be short lived and could resume it’s downward trend if EU inflation is high, supporting the view for an interest rate hike.

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