Spain Keeps Pressure On Euro

Drawing attention away from Greece’s seemingly limitless problems was a reminder that Spain is also in dire financial straits. The brunt of these concerns were caused by the indicative cost of borrowing for Spain soaring as investors worried about its deficit. Any further problems in Spain have received a temporary reprieve, however, as the EU Commission have stated the possibility of giving Spain more time to reach an agreed EU Deficit target, with the commissar of EU economic affairs stating that he is ready to increase Spain’s deadline by one year, to the end of 2014. Concerns remain, however, that Spain may have to seek an international bailout in the near future. This has allowed sterling, despite all the problems in the UK economy, to hold steady against the Euro, giving us strong rates for international transfers.

Sterling’s case was helped by the announcement yesterday that the UK property market picked up slightly in April, although overall recovery remained slow. The slight bit of economic luck we have had decreases the chances of the Bank Of England announcing further quantitative easing measures next week. Although analysts state that its likely the Bank Of England might have to introduce QE at some point in the near future, we have been granted a small reprieve.

Despite the Dollar being seen as a comparitive ‘safe haven’ outside the European currencies, the American currency saw some bad news yesterday, when the US Consumer Confidence Index fell to 64.9, down from 68.7 in April. This is especially disappointing, as analysts expected it to rise to 70. This has allowed sterling to gain some ground against the dollar, bringing rates up from the 5 month low that we’ve been seeing earlier this week. Sterling, however, still remains vunerable against the dollar. Whilst we are unlikely to see any major shifts in either direction in the near future, the small chance that the Bank Of England announces new QE measures next week could significantly weaken sterling against the dollar.