Pound hits €1.1575 against Euro, then falls
So why did the Pound gain so much against the Euro? It was due to reports that the Greek government is organising a referendum on more austerity measures, and this cast doubt on Greece's ability to tackle it's debt crisis.
So, this weakened the Euro significantly and as an alternative to the Euro investors flocked to the Pound, giving it some strength.
These gains were despite data showing household spending had fallen, and growth was at the 0.5% that analysts had expected. Most analysts now expect the Bank of England to raise rates in 2012, and it's not expected there will now be any hikes in the rate this year.
Will Sterling continue to go up against the Euro?
Unlikely. It's already fallen a point back into the €1.14's this morning. It's snapped back as it was simply investors taking advantage of the spike in the rate, and with the EU likely to raise interest rates several times this year while the UK doesn't, it's probably the case that the Euro will regain strength once debt issues in EU countries are out of the headlines.
Today's Data
Nothing of note for the UK, so don't expect any surprise gains as we saw yesterday. In the USA we have GDP figures and jobless claims, so we could see some movement for GBP/USD today.
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Labels: EU Debt Crisis, EU GDP., GBP/EUR 2 month high