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Home Forex Check Forex Rate Pound Euro exchange rate: Tuesday review
Pound Euro exchange rate: Tuesday review PDF Print E-mail
Written by Will Peters   
Tuesday, 16 March 2010 10:31
Pound Euro exchange rate is higher in morning trade as the British Pound looks to keep its head above water in an investment climate that remains skeptical to the UK currency.



The GBPEUR rate is 0.155% higher at 10am in London. 1 GBP = 1.1024 EUR.

"The British Pound slumped against the majors yesterday, falling back towards the major support level at $1.50 versus the US Dollar, after a YouGov Plc survey in the Sunday Times showed that Britain is headed towards the first minority government since 1974.

"The poll showed the Labour Party just four percentage points behind the Conservatives, indicating that either party may need to rely on the Lib Dems to form an administration," says Adam Solomon at business foreign exchange brokers TORfx.

In addition to ongoing political concerns there linger the fears over the UK's credit rating; the culmination of which saw the British Pound fall back 0.3% against the euro.

Worries over rising debt in the UK were also in focus yesterday when Moody's Investors Service warned that the country has moved "substantially" closer to losing their triple A rating.

But, then again, some would question this excuse:

The world's five biggest AAA-rated states (not just Britain!) are all at risk of soaring debt costs and will have to implement austerity plans that threaten "social cohnesion", according to a report on sovereign debt by Moody's.

The US rating agency said the US, the UK, Germany, France, and Spain are walking a tightrope as they try to bring public finances under control without nipping recovery in the bud. It warned of "substantial execution risk" in withdrawal of stimulus, the Telegraph reports.

Nevertheless, to understand the current foreign exchange rate markets one must buy into the story as analyst after analyst lines up the budget deficit story.

Jane Foley, research director at Forex.com, is one of these analysts: she said that "there is no let-up for sterling. There is real fear over the budget deficit and whether it will be tackled with a hung parliament. The increasingly likely scenario of a minority government would make it extremely difficult for officials to tackle the UK's debt position."
 
Comments by outgoing Bank of England policymaker Kate Barker saying that the UK economy may contract again for one quarter, also had the pound trading on the back foot.

Barker said that it is possible the UK will have to endure another quarter of negative growth but does not think that there will be a double dip.

Having resisted falling below the 1.10 level in trading yesterday evening, the pound has briefly slipped this morning.
There is little data from the UK, but the markets will await an economic sentiment survey from Germany, due at 10:00.
Last Updated ( Tuesday, 16 March 2010 10:36 )
 

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