The Euro has managed to find some respite in the midst of its debt crisis late yesterday and overnight. The single currency has managed to claw its way back above 1.40 against the US Dollar as concern is now growing over the US Trade Balance and the divide of US policy makers over the necessity of quantitative easing.
The Euro looked set to slide this week and even late yesterday that looked on the cards as Ireland were again downgraded by ratings agency Moody’s. This follows a long line of downgrades for European countries in recent months and the bounce back in the value of the Euro has caught many off guard. I wouldn’t be surprised to see the Euro push its way back towards the 1.41 + levels today with concern growing over the US Dollar.
Sterling seems to be caught in the middle at the moment and is unfortunately heavily reliant on a weaker Euro to improve the GBP/EUR rate, especially as recent data releases have been weaker than expectations. Going forward, we still feel that Sterling will improve, but levels much above 1.60 against the US Dollar and 1.14/15 against the Euro will probably be about as good as it gets at any given time in the near future.
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