Pound to Euro, US Dollar exchange rate: The Pound traded above 1.24 against the Euro yesterday

Currency

By on June 19th, 2012.
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The Pound traded above 1.24 against the Euro yesterdayConsumer prices rose 2.8% year-on-year in May, compared with a 3% increase in April and while inflation has remained above the 2% target since December 2009, price pressures are easing within the economy as food and oil prices drop.

Sterling / Euro and US Dollar exchange rates

The Pound traded above 1.24 against the Euro yesterday, as the positive sentiment following the Greek election on Sunday was short-lived and the uncertainty of whether the New Democracy Party would be able to form a coalition government put the Euro under further selling pressure. The market is concerned over political stalemate once more, while Spanish bond yields held above the 7% level, which is unsustainable in the short-term.

Investors will be watching developments in Greece very carefully but the uncertainty will continue to undermine confidence in the Euro, as the single currency weakened against all of the 16 most actively traded currencies. The G-20 are meeting in Mexico this week to discuss measures that could improve the global economy and there will inevitably be talks on the threat of contagion in the Euro-zone.

The Pound peaked at a high above 1.57 against the U.S Dollar and maintained a firm tone throughout the day, as speculation mounts that the U.S Federal Reserve will consider further stimulus measures to support U.S growth, as the two-day meeting begins today. The Pound has lost momentum against the Australian Dollar, however, falling through 1.55 after the Australian Treasury Secretary Martin Parkinson said the country has scope to respond from the economic turmoil in Europe.

The Pound came under further selling pressure this morning, after a report from the Office of National Statistics showed that UK inflation slowed to the least over almost three years in May with the first monthly contraction since records began in 1996. The scale of the data may just be enough to convince the Bank of England to expand stimulus measures in the July 5th meeting.

Consumer prices rose 2.8% year-on-year in May, compared with a 3% increase in April and while inflation has remained above the 2% target since December 2009, price pressures are easing within the economy as food and oil prices drop. The Bank of England introduced measures last week to improve bank lending and falling inflation could be key in the decision to sanction additional quantitative easing.

Data Released Today

U.K 09:30 – Consumer Price Index (May) – RPI

U.K 09:30 – ONS/DCLG House Price Index (April)

GER 10:00 – ZEW Index (June)

U.S 13:30 – Housing Starts (May)

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