Friday 2nd March 2011
Good morning. Sterling has had a very good run this week, rising against the Euro and US Dollar following positive comments from the Bank of England, coupled with continued uncertainty over the Greek Bailout. Today I will look at what has caused the Pound to rise against the Euro March 2012. The below charts show rate movements yesterday:
Why has the Pound risen against the Euro?
The Pound rose higher yesterday against the Euro, despite UK manufacturing data that was slightly worse than forecast. This was due to less chance that the Bank of England will embark on another round of quantitative easing in the next few months. There are also hopes that the British economy will not plunge back intro recession, and this also gave Sterling some strength.
BoE governor Mervyn King nudged the bar higher on Wednesday when he told lawmakers the bank will be guided by upcoming data when deciding whether to print more money. It had been thought that another £25bn of stimulus would happen in the next few months, but the latest data has reversed these expectations.
When QE is on the cards, the Pound generally weakens due to the chance of the flooding of Pounds into the economy. Now this is less likely, the Pound has gained against other currencies.
Euro weakens, becoming cheaper to purchase
The euro also weakened yesterday by around 0.3%, and this compounded the rise in GBP/EUR rates. The Euro came under broad pressure after a massive injection of cheap funds for the European Central Bank – as with QE, when there is a flood of funds, the increased supply reduces demand, making it cheaper to purchase.
With rates now very close again to the €1.20 level, it’s looking good for those that need to buy Euros. In recent times on every occasion rates have reached this level, the rate has dropped back away quite quickly again. With this in mind, if you need to buy Euros click here to find out how we can help protect against rates going the wrong way, and get you a level of exchange up to 5% better than banks or other brokers.
The EU economic summit continues, and there are further inflation numbers for the EU. There are some minor construction numbers from the UK, and GDP figures released from Canada at 13:30.
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.