Foreign Currency Rates - Why has the euro weakened and how will this affect Sterling?

Foreign Currency Rates - Why has the euro weakened and how will this affect Sterling

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The Irish bailout could be the trigger to a much wider and known crisis. Just looking at how much the euro has lost against the dollar from the flight to safety at fear of Contagion could be a sign of where we are heading. Where before investors had bankrolled the euro due to the lack of QE being announced, the US dollar is now the investors choice. We have discussed many times how sentiment and confidence moves the market and for the last few years between the euro, dollar and sterling determining the favourite has has been a case of a lesser of three evils.

This is currently the dollar and I would expect long term we could see sterling make inroads into the eurozone. The sturctural debt and growth problems continue to create weakness which won't go away. I don't think we will see major weakness for the euro on the GBPEUR ratethis side of Christmas, partly because the Irish issue affects the UK too much. But should the UK continue to ebb out of recession (something that will be determined by UK GDP figures this morning at 09.30 GMT) could be seen next year as the focus returns to the peripheral countries Portugal and Spain, which are not so connected to the UK.

As specialist currency brokers for the UK's largest independent currency firm, we are very well placed to assist with your personal currency requirements, offering award winning rates and service.We can massively undercut the banks so if you have a currency requirement speak to the authorJonathan on 0800 328 5884 / jmw@currenies.co.uk , he will happily explain all the ins and outs of sending funds overseas and how you can maxmise your transfer.

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