Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling flirted with ten month highs this afternoon as the Euro continues to feel the pressure

By Jon Beddell

Foreign Currency Market Update – GBP / EUR Update

Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast - Sterling flirted with ten month highs this afternoon as the Euro continues to feel the pressure

Sterling flirted with ten month highs this afternoon as the Euro continues to feel the pressure. The latest blow came as ratings agency SP warned of a possible downgrade to the EU’s ‘AAA’ rating, on top of downgrades to most of the major banks in the region. SP cited “deepening political, financial and monetary problems with the Euro zone” in its warning, and said that problems among the 15 nations on alert for a downgrade meant that the EU itself would be placed on ‘Creditwatch’. The only nations not to be put on Creditwatch were Greece, whose rating already reflects likelihood of default, and Cyprus which was already on the watch list.

The European Central Bank cut interest rates by 0.25% to 1% today in an effort to boost the struggling economy. The Bank of England kept rates on hold at their meeting today and also opted against adding more quantitative easing to the £275bn already approved. Most economists expect further QE in the New Year, with some predicting that asset purchases could reach £500bn in 2012 and the scope of purchases could be widened beyond the government securities currently on the menu.

The Euro’s fortunes will closely follow the outcome of a key summit in Brussels being held today and tomorrow. The French and German leaders have both made strong comments in favour of finding a solution to save the Euro zone from unravelling. Angela Merkel urged member states to “put national egotism aside”, and French president Nicolas Sarkozy said it was “our duty” to reach an agreement. Any agreement will be complex, because it may require renegotiation of the EU Treaty and agreement of all 27 states.

Despite the apparently precarious situation in which the single currency finds itself, the Euro has not actually declined very much. This should serve as a warning that the market believes any potential solution may ultimately result in a stronger more investible currency. This logic is easy to follow if you assume the solution may involve weaker countries like Greece and Italy leaving the Euro. Reluctance to severely punish the Euro tells us that the market is not expecting the great unravelling that some commentators (and even finance ministers!) are predicting. Clients with Euro requirements should therefore consider buying now while the rate is touching ten month highs.

Related posts:

  1. Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling was challenging 3 month highs as Euro zone debt woes continued…
  2. Pound Sterling to Swiss Franc Foreign Currency Exchange Rate Forecast – The Franc and Gold hit Record Highs…
  3. Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling hits five month low…
  4. Pound Sterling to US Dollar Foreign Currency Exchange Rate Forecast – Sterling hits 15 month high…
  5. Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling slips as 2nd Greek bailout agreed

Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/LbjvSyy6YmE/

Leave a Reply

WP2Social Auto Publish Powered By : XYZScripts.com
Bunk Beds