poshnbucks

Eurozone economies collectively shrank by a record 2.5% in the first three months of the year as the recession battered the continent.

The decline in eurozone GDP was driven in part by a record 3.8% contraction in Germany's economy, as demand for its high value goods, such as cars and machinery, collapsed.

The contraction is far worse than that of the UK and US, which saw their economies shrink 1.9% and 1.6% in the same period.

http://news.bbc.co.uk/2/hi/business/8049574.stm Spanish economy shrinks rapidly

http://news.bbc.co.uk/2/hi/business/8051332.stm


http://www.thisismoney.co.uk/news/ar...icle_id=485283

The pound had risen to 1.12 euro to the Pound last night.

snikpoh

The predictions are that it may reach 1.30 by the end of the summer ...

poshnbucks

Ahhhhhhhhhhh Do not believe all Mitzyboy tells you.

jackytoo

No bad news from Europe seems to lower the Euro, strong against the Dollar too.

Chiclanagir

Has the European Central Bank cut interest rates?

poshnbucks

Keep up to date below.

http://www.ecb.int/mopo/decisions/html/index.en.html

http://www.ecb.int/stats/monetary/ra.../index.en.html

http://www.ecb.int/home/html/index.en.html

Helpful-Bob

Barclays are still punting an exchange of 1.30 for the backend of the year, so hopefully they have guessed right.

frigilianafreddy

Lets hope those clever Barclays boys are better at guessing than running a successful bank.:ro fl:

Lospacoshombre

In this crazy economic period I think nobody can predict where its going, I personally believe that the UK interest rate will start to rise again soon and the pound will get stronger against the Euro

LPH

expatchristy

I looked into this in January, I used icap and other monetary trading comapnies They had predicted that by March the pound would be at 1.20 and by the end of the year about 1.25. Well relatively speaking I think we we'll be lucky to see it reach 1.20 by the end of the year.

I think the euro will take longer to unravel than the pound but I think it will, It is so complicated whats affecting the euro compared to the pound so I think it will get better for the pound.

based on the above I think 1.20 is a good guess for the end of the year.

steviedeluxe

Quite a few optimists I see here. The fly in the ointment is the 100s of billions that the UK government needs to either borrow or print (the BofE decided to print another £50 billion only last week). I hope they know what they are doing; if the UK veers into hyperinflation, the pound will become effectively valueless. I'm scared.

jackytoo

Agree, there are unknown influences too, terrorist attacks, Gov. could collapse. I do think the Pound will strengthen, wish it were soon

dunmovin

Given the fact that MP's are having to repay all their fiddled expenses and Gordon Brown's popularity is heading for negative figures,you may be right

frigilianafreddy

ECB, the Fed, BoE - they're all printing money. Basically its a global policy decision.

Simple fact is that, contrary to IMF predictions, UK GDP contraction is a damn site less than Germany, Ireland, Greece and a number of other euro countries.

So, the € will weaken against the £.

The problem, as Keynes once said, is that "markets can stay irrational longer than you can stay solvent".

My money would be on 1.20 to 1.30 by end year.

bigglesworth

(Love the Keynes quote).
Higher exchange rate? Possible. I do favour 1.20 even 1.25 by the end of the year.
But this would not be an unalloyed blessing. Depends how much one is dependent on the UK economy - i.e. have anything in sterling, savings, pension, house or any other assets.
Gordon and the Morons have still run up the largest structural deficit ever known - by several multiples. Which has to be financed, extended and paid back. UK plc is now faced with deeply unpalatable decisions.
Sterling's collapse was well overdone - with the rest of the innumerati assisting Gordon in talking it down. This undoubtedly helps reduce imports and increase exports, at least in the short term (and Gordon's only concern is the next twelve months). So expect Gordon, the Darling Boy and Merv the swerve to keep on trashing the UK and the pound, to try to prevent it bouncing back.
However they also need the international markets to lend them up to 250 billion pounds a year. Which they may be reluctant to do for several reasons.
Firstly that all the money they lent Gordon over the last ten years is now worth 30 percent less.
Secondly interest rates hardly merit lending money to a credit junkie like Gordon.
Thirdly, in order to keep Sterling weak, Gordon is likely to continue printing more money, with all the awful consequences that that implies. The BoE is already implicitly acknowledging that deflation was just spin, and that inflation WILL still be in positive territory at the end of the year. And next year? Inflation here she comes. So why would foreign investors lend any more?
The only way they can square that circle is by increasing interest rates. Which MIGHT strengthen the pound, reducing the economy's ability to bounce back. (I say might because currency markets,although ultimately rational) are often emotional, and if they get a hint of weakness, they will go for sterling's throat).
And after the election, the incoming government will be faced with massive cuts in the public sector, and some fairly hefty tax rises. Which in the short term will put further pressure on sterling (although longer term it would have the same beneficial effects as the restructuring and exit from the ERM, benefits which Gordon so spectacularly threw away.