Rates have slowly moved down from the high of 1.2860 seen a couple of months ago and are trading around 1.25 at present. As we predicted it was unlikely the rate would just keep climbing indefinitely and anyone who was holding out expecting to hit 1.30 should probably adjust their expectations in the short term.
With all of the problems for the pound, it is unlikely that we will see sterling make a major resurgence and instead we are relying on Euro weakness. With so much recent Euro positive news for the time being it looks like the Euro will remain stronger against the pound.
The German Constitutional Court ruling today has effectively paved the way for further Euro strength as it allows German taxpayer funds to be used to fund bailout schemes in Europe. A potential banana skin could be the Dutch elections which take place today. The election battle has been fought over austerity and some view the election as a direct challenge to the Dutch membership of the Euro.
If I was buying Euros I would not really be hanging around hoping for improvements. The current market is in a downward trend and I would not be suprised to see this drop closer to the 1.22-1.23 time. For that reason Euro sellers for GBP may wish to hold back and see what happens towards the end of the week. With the US Federal Reserve Bank holding their interest rate meeting today we could see movement on EURUSD which would affect GBPEUR.
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