The Euro bounced back from yesterday’s sharp losses ahead of today’s Italian bond auction. The Euro suffered its biggest single day drop against the Dollar for more than a year and may continue to find itself under pressure in the near future. Italian 10 year bonds rose to over 7% yesterday which was the same level that Greece, Ireland and Portugal got to when they were forced to request a bailout. The fact that Silvio Berlusconi has resigned to make way for a new Italian leadership has eased a small amount of pressure on the Euro as it looks as though Italy are taking the necessary steps to correct their current situation.
The coming months will be a testing time for Europe as they desperately try and prevent any further cracks from appearing in the single currency and hold it together. The longer time goes on the debt crisis seems to deepen further and further and it seems inevitable that the Euro will at least have to make some severe changes to maintain its existence.
The Bank of England meet today for their monthly interest rate and policy meeting. We are expecting no change to interest rates and monetary policy after last month’s increase to the quantitative easing programme. For all intents and purposes Sterling is holding its own extremely well and further gains against the Euro and Dollar look like they could be on the horizon so now looks a good time to look at Limit Orders to take advantage of higher exchange rates
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