Currency Update 19th April 2010

This weeks look at the euro and the pound with currency expert Keith Spitalnick

The pound has made fractional improvements over the last week, with the GBP/EUR rate closing in Europe and UK at 1.141 (0.8764).  This is despite further narrowing in opinions polls on the election campaign trail.  Interestingly the euro did strengthen earlier in the week on the proposed Greek package of €30billion, but the euro has gone on to lose that gain after confusing caveats and questionable commitment from Germany.

Leaders debate did not help

In the UK the leaders of the three main political parties held a live televised debate last week. The event did little to clarify the outcome of upcoming election, with sterling still suspect to swings in the opinion polls in the month ahead. Nick Clegg, the Liberal Democrat leader, shone through in the first of three debates as the parties look to win over undecided voters.

Bail out for Greece?

Greek Prime Minister George Papandreou last week asked for a meeting with the European Union, the IMF and the ECB, leading to speculation that a bailout is imminent. Talks are to begin in Athens on 19th April. The country’s cost of borrowing from private markets continues to rise. Financial markets have shunned Greek debt in recent weeks, despite escalating promises from the EU that they would step in to prevent a default. The euro was the worst performing major currency on these renewed fiscal worries.

This week will be heavy with UK economic data, which will hopefully expose the hollow sentiment behind The Chancellor’s March budget.  Improvements in retail, services and a rise in high street price may see the pound attempt to push higher, but it will find stiff resistance at 1.15 and pressure will increase over the next six weeks and the chances of a sterling sell still hang in the balance.

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