Sterling has lost further ground against the EUR during Thursday morning’s trading, continuing the trend from yesterday. The Pound has come under pressure against the single currency this week but the reasons for this are not entirely clear as of yet. When you look at its performance against most of the other major currencies, in particular the USD, we’ve actually seen GBP gain ground. GBP/USD rates have moved back through 1.54 and at one stage looked as if the Pound may put pressure on the 1.55 resistance level. Whilst this did not occur, the improvement seen against the USD over recent trading days was certainly unexpected and may be attributed to the rumours that the US FED will not be raising interest rates during the summer.
Moving back to GBP/EUR and it was interesting to note that this morning we saw a run of poor Eurozone data, in particular the Eurozone unemployment rate which came out worse than expected at 11.3%. However, GBP/EUR rates continued to drop, which to me indicates that there is more to this move than general market fluctuation. The two main catalysts in my opinion are likely to be the UK general election, which is now starting to take its toll on Sterling and the Greek debt crisis, which if rumours are to be believed may be moving forward more positively than people thought.
With so much uncertainty over which political party will be in power and therefore no understanding of what policies are likely to be implemented over Europe etc, the Pound was always likely to come under pressure. This is likely to continue for the next couple of weeks and if we do see any sort of resolution with Greece then expect the recent EUR momentum to continue.
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