Sterling declines against Euro

The Pound finished last week lower against the Euro but better against the US Dollar, as the single currency strengthened in the aftermath of the Greek bailout agreement.

Last week’s confirmation of the UK’s exit from recession and the appointment of a bullish new Bank of England Governor to take over from Mervyn King next year, were not enough to keep sterling’s strength against the resurgent Euro in particular.

This week we return to a busy schedule in financial markets. With December trading around the world due to slow for Christmas in 3 weeks, we have a lot to get through in what could be a volatile month – most notably whether the US Dollar will follow the Euro and gain strength from any resolution to the American ‘fiscal cliff’ tax and austerity conundrum.

This week, we have interest rate decisions in the UK, Eurozone, New Zealand and Canada – and while interest rates are not expected to change, the accompanying central bank statements can always influence exchange rates.

First off today sees UK manufacturing growth at 9.30, and with George Osborne partaking in some expectation management in television interviews this weekend by saying that the deficit reduction is taking longer than planned, perhaps there is bad news ahead for the British economy and the Pound.

At least Starbucks have announced that they will “look at” their tax approach in the UK, which might give Mr Osborne something to smile about as he tucks into his skinny latte this morning, ahead of some key economic data through the week. Keep in touch with us at Currency Index if you would like to be alerted to rate movements, or for a free quote on your currency transaction today.