Wednesday 26th October 2011
Good morning. The Pound fell slightly yesterday, as riskier currencies such as Sterling came under pressure amid uncertainty as to whether policymakers will take major steps to tackle the euro zone debt crisis. It was announced yesterday that meeting of EU finance ministers which was to have preceded the leaders’ summit was postponed, throwing doubt over a resolution. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1500
• GBP/USD 1.6021
• GBP/AUD 1.5427
• GBP/NZD 2.0088
• GBP/CHF 1.4036
• GBP/CAD 1.6226
• GBP/ZAR 12.6774
• GBP/JPY 121.55
• GBP/DKK 8.5599
• GBP/NOK 8.8482
• EUR/USD 1.3926
EU debt summit – how will this affect exchange rates?
European Union leaders are gathering again today for an emergency summit in Brussels hoping to finalise details of a plan to tackle the eurozone debt crisis. There are fears that the Greek debt crisis could spread to Italy and Spain, and this has caused market turmoil in recent weeks and months.
It was announced yesterday that the meeting of Finance ministers scheduled for today had been cancelled, rumoured to be because of disagreement between the main powers. The leaders summit will still take place, but it’s uncertain what if anything will be agreed today.
There were already some points of agreement reportedly reached at the weekend by EU officials, and there is a detailed report on this on the BBC site here. With regards to the currency markets, if an agreement is reached that the markets like, then it will likely strengthen the Euro and also riskier currencies such as the Pound. If however there is continued disagreement and no plan agreed, it’s likely the Euro and Pound will remain weak, and safe haven currencies such as the US Dollar will strengthen.
Sterling also at risk on BoE comments
Sterling didn’t react very much yesterday after comments from Bank of England Governor Mervyn King, who testified in front of the House of Commons Treasury Select Committee, explaining the Bank’s decision to resume asset purchases this month.
King said the Monetary Policy Committee had come very close to restarting QE in September but held off to see if volatility in financial markets would subside, before taking the decision to resume in October. Recent data has underlined a darkening economic outlook which could force consumers to deleverage and cut back on spending. This could weaken the Pound further, but markets are purely focused on the EU debt summit at the moment, which is why there was not as much reaction as would normally be the case.
The debt summit of EU leaders will take centre stage today. Other than that, the only UK data today is the CBI industrial trend survey. In the USA there are various releases regarding Home Sales. New Zealand has an interest rate decision and trade balance figures that may affect GBP/NZD rates.
If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.