Sterling, US Dollar and Euro Exchange Rate: The Pound to US Dollar Exchange Rate grew by 0.52% last week

Written by on February 20th, 2012

Foreign Exchange Rates Currency News - The Pound to US Dollar Exchange Rate grew by 0.52% last weekThe Pound to Euro Exchange Rate has been fluttering around the 1.2 mark.

Sterling / Euro and US Dollar exchange rates

The Pound to US Dollar Exchange Rate grew by 0.52% last week due to some better than expected Sterling data. The Bank of England has improved its outlook for the British economy slightly, despite raising the bar to £325 billion in its latest round of Quantitative Easing. The BoE noted that the 2% target for inflation should be attainable due to a decrease in price pressures. Encouraging Retail Sales figures also helped propel the Pound upwards last week, with the year-on-year statistic improving by 2.0% this January against an expected increase of only 0.5%.

The Pound to Euro Exchange Rate has been fluttering around the 1.2 mark over the past week with the Greek debt deal dictating the majority of market movements. The Euro has found support when headlines have suggested the deal will be made, and conversely the Pound has regrouped whenever the deal has been put in doubt. The Euro lost 0.38% to the US Dollar Exchange Rate last week as a result of the confusion surrounding the bail-out package.

Rightmove’s House Price Index rose by 4.1% in February as the British economy shows more signs of revival in 2012. The only biggie this week in terms of UK ecostats comes in the form of the Bank of England Minutes where the central bank’s governor Mervyn King will outline inflationary outlook and explain their decision to expand the asset purchasing scheme.

A meeting this afternoon between Greece and the Eurogroup of finance ministers will take place at 2:30. Theoretically it should see Greece receive its second tranche of aid. Greek PM Lucas Papademos has flown to Belgium to help reassure the Eurogroup that Greece has fulfilled its side of the deal.

The deal which has been widely contested by members of the public in Greece, will incur changes in labour laws, widespread job loss and pension cuts. The message from former ECB man Lucas Papademos is that harsh austerity is still far better for Greece than a default from the Eurozone and bankruptcy.

Speculation that Greece would be better off exiting the Eurozone, reverting back to the Drachma and benefitting from its relative currency devaluation in terms of exports will not sit well with markets. In terms of the global economy it is vital that a Greek deal is agreed upon; expect the Euro to rally if the announcement is made this afternoon.

Will Greece’s second aid package prove enough to pull the country up from mass recession? That remains to be seen. But the fact that the European Central Bank exchanged its Greek government bonds (for a new set that are immune to potential restructuring devaluation), suggests that this time the deal could actually go ahead. Expect the safe haven US Dollar to suffer in the short-term at the hands of risk-on investors exchanging their dollar denominated assets; the Pound should grow on the announcement but not as much as the single currency Euro.

Data Released

UK 0:01 – Rightmove House Price Index (February)

JP 05:00 – Japanese Economic Index (December)

EU 14:30 – Eurogroup Finance Ministers meeting on Greek aid (February)

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

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