Thursday has seen a further spike in the market for GBP/EUR with a move towards 1.2650 on the Interbank. This represents the highest levels four years and with the Pound falling off against almost every other major currency, this represnts an excellent buying opportunity. Yesterday’s euro bond auctions have hampered the single currencies chances of a fightback and today Bank of England governor Mervyn King, who it has to be said is not one who views any economic situation with the glass half full, has confirmed that the eurozone crisis is his “biggest worry.” He accused EU leaders of not tackling the funadamntal issues in Europe and passing the buck to others.
So whilst GBP/EUR rates scale these lofty heights you could be
forgiven for thinking this was a good time to be holding Sterling. Whilst it
may appear that way, we have actually seen the pound for the most part lose value against a basket of currencies. For this reason anyone who is waiting for GBP to continue its rapid rise against the euro should heed various warning signs.
UK economic data has been deteriorating for the past couple of
months and according to Mr King, we may only be halfway through the current economic crisis. This is a matter of considerable concern but even more worrying was the release of last week’s UK Construction PMI data, which showed the weakest figures in two and a half years. Poor construction data was blamed by many analysts as the reason behind the UK falling back into recession at the beginning of this year, so to me this is already a clear danger sign.
When you add last week’s confirmation that the UK economy will be
injected with a further 50 billion in Quantitative Easing (QE), with further
outlays likely to follow, it indicates the Pound could lose value very quickly
should any sense be made of the eurozone debacle.
I feel that GBP/EUR rates could well move away from the current
highs over the coming weeks and trading levels of 1.25 could quickly evaporate. If you have an upcoming currency requirement and would like to take advantage of this spike in the market, then please feel free to conatct me directly at [email protected] or on 01494 787 478.