Tuesday 27th September 2011
Good morning. Sterling rose against both the Euro and US Dollar yesterday, as a UK bank had to convert significant sums to Sterling, strengthening the currency. The Pound rose against the Euro on talk of further plans to help Greece with it’s debts. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1502
• GBP/USD 1.5574
• GBP/AUD 1.5742
• GBP/NZD 1.9761
• GBP/CHF 1.4042
• GBP/CAD 1.5970
• GBP/ZAR 12.349
• GBP/JPY 118.92
• GBP/DKK 8.5560
• GBP/NOK 8.9574
• EUR/USD 1.3538
Sterling rises against Euro & US Dollar
The Euro weakened slightly yesterday, on the news that Greek Prime Minister George Papandreou will hold talks with Angela Merkel to discuss his country’s progress in cutting its budget deficit. The meeting comes as policymakers decide whether to release the latest tranche of Greek bailout funds.
European leaders are trying to agree a comprehensive package to solve the eurozone debt crisis once and for all, however divisions remain between member states on how best to do so. Due to the continued uncertainty and lack of direction in the EU, this caused some weakness in the Euro and pushed rates up above €1.15.
Gains limited due to threat of further Quantitative Easing
Despite its gains yesterday, Sterling remained under pressure against both the Euro and US Dollar, on concerns a fragile UK economy could prompt the Bank of England to resort to more monetary easing.
Comments from BoE policymaker Ben Broadbent in an interview yesterday fueled the view the monetary policy committee will pursue another round of quantitative easing after he said the economy would not have to weaken much more to warrant more stimulus. This is likely to keep any gains for the Pound in check, and analysts are predicting further falls for Sterling.
What do the analysts say?
“He very much sums up the view of the BoE. He came in a hawk, when inflation was elevated, and when data was holding up fairly well. Today he said he was very close to calling for QE whereas that would have been impossible when he first came in,” said Chris Walker, currency strategist at UBS.
“That’s the same with other members, including Spencer Dale and Martin Weale, who were calling for hikes only a few months ago, but now are calling for QE themselves.”
EU lending figures are released today, which investors watch as a sign of confidence in the economy. From the US we have Consumer Confidence figures which could affect GBP/USD rates.
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