GBP/EUR March Currency Update

Old Apr 12th 2010, 12:28 am
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Default GBP/EUR March Currency Update

Sterling was under pressure for most of the month, with the nervous markets anticipating a hung parliament for the forth coming election, and the Chancellor giving his final budget before the General Election . The Euro took the heat off with the Greece & Portugal debt woes stealing the headlines, and a Brussels (France and Germany) bailout looking likely. This economic situation is still at the forefront of everyone’s mind. Portugal’s economic difficulties could be on the brink of taking focus as FITCH ratings agency reduced Portugal’s sovereign credit rating by a notch to AA-. The PIIGS story will remain in focus for some time. (PIIGS stands for Portugal, Italy, Ireland, Greece and Spain, all economies struggling in Europe and being monitored).

From the Sterling side of things, we saw Polls showing that a 50/50 split in the upcoming government elections is likely -this was a great excuse for traders and investors to sell Sterling again. Risk Aversion was at its best seeing GBP plummet; as the market dropped, we broke through multiple technical levels and panic trading forced the market lower and lower.

The major concern now is reports saying we will see parity against the Euro between now and June looking more and more possible. Sterling was boosted however by positive housing data and political opinion polls. Data showed UK house prices gathering pace in January to a 6.2% rise year-on-year. Opinion polls showed that an upcoming general election may result in a majority government, rather than a hung parliament which has been weighing on the pound. However, it is worth remembering fiscal concerns and political uncertainty are still apparent and are possibly limiting the strength the pound can gather.

UK inflation figures came out slightly lower than expected at 3.0% (YoY). GBP took a small hit on the back of this news as it means that the BoE has less reason to increase interest rates if inflation falls back in to their 2% target area as they are predicting.

Current Central Bank Rates:

BOE (Bank of England): 0.50%
ECB (European Central Bank): 1.00%

GBP/EUR Highs & Lows of March:

High: 1.1270
Low: 1.0926

A movement of: 3.14%

Difference this would make on £200k

High: € 225,400
Low: € 218,520

A difference of €6,880

All of the information above can be explained clearly by your personalised dealer should you open a trading facility with HIFX. To discuss your requirements in more detail and for a free currency consultation please contact HiFX plc on 01753 859 159 or email [email protected].

Kind regards

Mark Bodega
Director - HIFX
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