Euro Up Against Pound
The euro has risen to its highest point in over a year against the pound amidst market reassurance that the euro is resilient enough to cope with current uncertainty.
The euro was up as far as £0.6865 yesterday off the back of negative news from London regarding the mainstream mortgage lender Northern Rock, which reported a state of dyer financial emergency in the wake of over exposure to the sub-prime sector.
The euro, officially the currency in the thirteen EU nations deemed to be within the ‘eurozone’ has been driven in recent days by positive measurements from within the EU economy.
Firstly, Chairman of the European Central Bank Jean-Claude Trichet underlined that in his view there were no fundamental problems with the EU economy, and it was emphatically not on the road to recession.
Just a day later, the Bank of France revised its French growth forecasts upwards by almost 1%, reflecting an increase in outlook for the French economy and the Eurozone as a whole.
Additionally, the pound has taken a battering in recent weeks, with investors becoming overly conscious of the impact of a credit squeeze, particularly in light of the Bank of England’s emergency rescue package for lender Northern Rock.
The European Central Bank is also expected to raise interest rates from their current 4% level by the end of this year in a bid to calm the effects of inflation and bring more stability to the Eurozone economy – beneficial news for currency investors. Meanwhile the Bank of England is not expected to raise rates in the short to medium term, with inflation apparently under control.
The added effect of all these factors has been to significantly weaken the value of the pound against the Euro on international money exchanges to its lowest level in fourteen months.
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