1st December 2010
Good morning. The pound rose again to a new 2 month high vs the Euro yesterday, after a rescue package for Ireland failed to dampen speculation other bailouts would be needed in the euro zone. Rates at 08:30am are as follows:
Weak Euro pushes GBP/EUR to new 2 month high
The worries over sovereign debt continue to weigh on the Euro, weakening it again against other currencies. This has helped push rates through the €1.19 barrier yesterday. "The market is still extremely nervous about sovereign risk, with Italy now being drawn into the firing line," said Gavin Friend, currency analyst at nabCapital.
"But in the near-term I think we might be getting over-extended here. A strong set of euro zone PMIs this week would go a long way to helping the euro find a base," he said. Manufacturing PMI surveys for the euro zone are released today.
The agreement of a €85bn emergency aid package for Ireland, felled by the costs of bailing out its banks, has failed to allay market fears over the health of the eurozone. It won't last forever though. Given the continued weakness of the Euro over the last few weeks, some analysts think we could now be coming to the end of the weak run.
Analysts said the market was looking for more pre-emptive action by policy-makers in the region after a rescue package for Ireland at the weekend, as pressure in the euro zone bond market was widening to more countries including Belgium. If the EU policy makers can calm the markets, and there were more positive economic figures from the Eurozone, then we could see the Euro gather strength again.
Labels: GBP/EUR 2 month high