Sterling Leaps To A High Against Euro

  • 14 years ago
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 Sterling high against the Euro

As the Eurozone debt crisis continues to snow-ball (forgive the pun in today’s UK weather conditions!), the Euro has fallen to around a ten week low against Sterling. Fears are rising that Ireland’s signed rescue deal is under threat of being passed in the new budget on 7th December. Fine Gael, Labour and Sinn Fein have signalled they will vote against the austerity budget necessary to make Ireland’s own contribution necessary. Contagion problems are an issue with Portugal and Spain thought as increasingly vulnerable.

Pound Sterling – UK Markets

The Pound closed at €1.1848 against the single currency, gaining 0.1% on the day and has since risen to 1.1933 by 10.30am this morning. European debt woes and lower job loss forecasts have helped pushed the Pound up against the Euro.

The Pound weakened further against the Dollar yesterday to close at $1.55758 as the Dollar is also benefiting as a safe haven in the Euro uncertainty. The Office for Budgetary Regulation (OBR) has decreased its forecast for public sector job losses following the UK government’s austerity measures, by 160000 to 33000. The four year projection was changed to reflect the fact that benefit cuts had been targeted more strongly than cuts in departmental spending. OBR also trimmed their prediction for UK growth in 2011 from 2.3 to 2.1 and from 2.8 to 2.6 in 2012, but they also believe that 2010 growth will be stronger than predicted at 1.8 percent.

US Dollar – US Markets

The Dollar closed higher against the Euro at $1.3146, gaining a further 0.6% as concerns over spread of the sovereign debt crisis persist. Fears that China may soon act to tighten fiscal policy has also increased flows to the US Dollar as a safe haven.

Good retail figures from Black Friday as well as encouraging general sales figures have suggested there may be a positive pre-Christmas surge in this area of the US economy.

Today’s US consumer confidence figures are expected to denote a rise indicating a general positive shift in sentiment towards the US economy.

Euro – European Markets

The Euro fell further against major currencies yesterday as fears persist that Ireland’s rescue package is in jeopardy and that the sovereign debt crisis will spread in all likelihood to Spain and Portugal next.

Following protests against the austerity measures necessary in Ireland to secure their own contribution to the recue package, the budget on the 7th December is becoming increasingly contentious with party leaders speaking out to say they will not support the budget. A disappointing Italian bond auction yesterday suggested poor sentiment is also being generated towards other Euro nations.

This morning’s consumer price index registered no change with the figure remaining at 1 percent.

German unemployment figures have been doing very well, showing that German unemployment is at its lowest levels since 1992 – for the Euro, this in many ways only serves to indicate the contrast between Germany and the struggling nations.

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Source: Currency Solutions

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