Thursday, 2 December 2010

Pound vs Euro rates fall as ECB calm markets

2nd December 2010
Good morning. The Euro actually gathered some strength yesterday, and Sterling Euro rates have now fallen back below the €1.19 level. There is an ECB meeting today, and the fall in rates could be investors paring short positions ahead of today's meeting. So the general downward trend for the Euro could well continue. at 08:30am this morning rates are as follows:


  • GBP/EUR 1.1869
  • GBP/USD 1.5606
  • GBP/AUD 1.6129
  • GBP/NZD 2.0702
  • GBP/CAD 1.5811
  • GBP/CHF 1.5630
  • GBP/ZAR 10.862
  • GBP/JPY 131.13
  • GBP/NOK 9.5808
  • GBP/DKK 8.8423
  • EUR/USD 1.3136

ECB Bond Purchase calms markets re. Euro

The Euro was calmed yesterday by indications that the European Central Bank could substantially increase purchases of eurozone bonds. A warning to markets from Jean-Claude Trichet, the president of the ECB, not to underestimate Europe’s determination to resolve the escalating eurozone crisis was taken as a signal that the central bank will step in.

As a result the Euro has gathered strength and the recent run of rates improving has now reversed and GBP/EUR rates have fallen back.

Fears that Portugal could follow Ireland and Greece in receive a massive international financial bailout sent the euro sinking to a two-month low on Tuesday before recovering a little on Wednesday.

"The euro has stabilised overnight following comments from ECB President Trichet hinting that the ECB could consider expanding its sovereign debt purchase programme," said Lee Hardman, analyst at The Bank of Tokyo-Mitsubishi UFJ in London.

Despite the improved sentiment the European debt crisis still dominated with Portugal being put on credit watch by ratings agency Standard & Poor's, which saw "increased risks to the government's creditworthiness".

Today's Data

A very important day today with some key releases that will affect rates. From the EU, we have GDP figures and an interest rate decision. Given the turmoil in the Eurozone at the moment these will be closely watched by the markets. From the US there are various jobless measures.

Also watch for any comments from the ECB president after the decision at lunchtime, as his comments could well calm the markets further and send GBP/EUR rates lower.

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