Euro price rises as Italian and Spanish bond sales beat expectations
12 January, 2012
The Euro has strengthened against sterling in trading today, as Spain and Italy’s borrowing costs fell sharply in auctions today. Spain borrowed 10bn Euros – twice as much as its original target – paying an average interest rate below 4%, while the interest rate on Italian 12-month bonds fell to 2.735% from 5.952% at the last similar auction in December.
The cost of debt refinancing in Italy and Spain has been one of the main worries in the Eurozone crisis, so the cheaper auctions unsurprisingly caused the Euro price to increase, giving lower exchange rates for buying Euros.
In addition, the ECB held interest rates at 1%, and in the UK we saw a drop in manufacturing and industrial production. Thankfully the Bank of England did not extend quantitative easing, although this could happen next month, putting additional pressure on the Pound.
Weak retail sales in the US have kept the dollar rate steady today.
Tomorrow we have UK producer inflation at 9.30am and the Eurozone trade balance at 10am. For the latest news and a quote on your own currency transfer please contact us on 0800 043 2623 or +44 1923 725725.
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