Sterling, US Dollar and Euro Exchange Rate: The Pound lost ground against the Euro yesterday


Foreign Exchange Rates Currency News - The Pound lost ground against the Euro yesterdayThe Euro exchange rate found support in the region of 1.31 against the U.S Dollar.

Sterling / Euro and US Dollar exchange rates

The Pound lost ground against the Euro exchange rate yesterday, losing about a cent on the day, while the UK currency also sank to a fresh 27-year low versus the Australian Dollar and declined against a basket of currencies following a report from the British Retail Consortium, which showed that UK retailers suffered their second worst January on record.

Slower economic growth and a worsening outlook meant consumer spending suffered with sales down 0.3% from a year earlier. A separate report from the Royal Institution of Chartered Surveyors showed that the UK property market continued to struggle, amid deteriorating economic conditions, which helped push down asking prices.

The report is the latest to show the sovereign debt crisis in Europe is restraining demand for property and the index follows a report from the Halifax last week, which said prices were down at the lowest level in 2 ½ years. The Pound also declined against the U.S Dollar, as UK stocks slumped, with
investors waiting for Greece’s politicians to agree on fresh austerity measures to secure a second bailout and China said its industrial output may decline this year.

The Euro slumped by the most in a week against the Dollar, as the elusive agreement on Greek spending cuts continues to dominate market sentiment. The single currency recovered marginally after the German Chancellor Angela Merkel and the French President Nicolas Sarkozy proposed setting up a separate account for Greek debt payments in an attempt to reassure creditors.

The Australian Dollar rallied strongly against the Dollar and the Pound, after the RBA unexpectedly left interest rates on hold, raising investors’ appetite for higher-yielding assets. The Aussie Dollar made strong gains against all of the 16 most actively traded currencies, as the Bank indicated that global growth will continue to strengthen. The bullish stance of the RBA came as a surprise following two consecutive months of rate cuts and the move will support the Aussie and risk appetite as a whole.

The Bank of England’s monetary policy committee will begin their two day meeting today with a decision due at midday on Thursday. There has been a moderation in expectations surrounding further quantitative easing this month, which has provided Sterling support, although there will still be caution ahead of the announcement.

Euro / US Dollar exchange rates

The Euro found support in the region of 1.31 against the U.S Dollar and pushed higher through the course of the day, driven by the improvement in risk appetite, as European stocks rose for the first time in three days. Greek officials continue to discuss the details of a rescue plan with creditors and prepare to announce fresh austerity measures to warrant a second bailout to ward off the threat of a hard default.

The Euro continued to advance despite a sharp decline in German industrial production, as the focus remained on risk sentiment and Greek debt negotiations, as reports emerged that the coalition government had agreed on a framework for reforms. However, there is still no formal agreement announcement and there were also reports that the ECB would be willing to exchange Greek debt holdings with the EFSF.

In the U.S, the economic data was relatively insignificant as consumer credit rose by a further $19.8 billion in the latest month, while there was also a strong reading on consumer confidence. The data was largely overshadowed by comments from the Fed chairman Ben Bernanke who said that the non-farm payrolls data was understating the unemployment problem.

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