We’ve seen a poor run of UK data releases over the past 24 hours and this has halted Sterling’s recent momentum against the EUR. The catalyst was yesterday’s poor Manufacturing figures and the Bank of England’s stress test results on the UK banks. Both of these knocked market confidence in the Pound and the EUR benefited from it. This negative feeling continued today, with UK Contraction figures coming out under expectation at 55.3.
Despite this dip rates are still floating around 1.42 on the exchange and remain close to an 8 year high but I do not see the Pound breaching the highs we saw in the summer under current market conditions. Eurozone unemployment has fallen and despite the threat of further Quantitative Easing (QE) by the European Central Bank (ECB) this month, I feel that investors have already factored this outcome into the current exchange rates.
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