The current spike on GBPEUR is in my opinion bound to falter soon. The Cyprus situation albeit not resolved should be closely watched as it is likley the rate will react to the headlines here. I have heard reports the Cypriot Finance Minister has resigned amid the tough choices faced by the parliament. Like an elastic band being stretched to the p[oint of snapping the euro crisis continues to test everyone’s resolve. One particularly shocking piece of news I heard was that last week about €6 billion left Cyprus as there were rumours of this happening. I know the people of Cyprus were promised they would not lose their money, today that loose bond between the people and the rulers looks more fragile.
If we were talking purely about the euro I would say rates for buying euros will improve due to euro weakness. However tomorrow we have the UK budget, Bank of England Minutes and Thursday UK borrowing data. With the way the UK and the pound has fared in recent weeks these events are bound to attract international attention after the UK lost the triple A rating a few weeks ago. What hope does Osborne have to restore confidence. It appears the medicine for the UK will be based on more of the same.
I expect tomorrow to be a very interesting day therefore on GBPEUR. If you are looking to buy or sell currency tomorrow may be the day to move or reconsider your position if you are holding on for better levels. when the UK lost the triple A a couple of weeks ago GBPEUR dropped to the mid 1.13’s in the morning before climbing to over 1.16 by the end of the day due to the Italian election. This was more movement in a day than you seem sometimes in a whole month!
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