The currency blog

Sterling and the Euro have been dancing between the 1.1650 - 1.1950 range for the better part of the last fortnight. Compared with the splurge of information released at the beginning of both May and June, July has seen an evenly weighted battle between these two currencies; UK growth has kept euro under pressure, and the most recent stress tests for European financial institutions have brought inconsistent sentiment to the market. We don’t really know what stresses we tried on Europe’s banks, or the criteria by which a bank might pass or fail. City pundits have suggested that the stress tests themselves are a hollow exercise that serve only to suggest that the Eurozone is prepared to address reckless risk taking; but what is being testing? Have these steps gone far enough, and what will happen to those banks who are primed to reveal losses and liabilities later in the year but meet the requirements of these tests at the moment?
These questions are just some of those which have undermined confidence in the euro over the past week to ten days. The decision rests with investors and traders, and after Europe and London’s closes on Friday 23rd sterling was seen to improve taking its high for the day up to 1.2019.
Monday will be interesting. Politically and economically the UK can adopt the high ground as our GDP figures do show some positive signs, and our austerity measures have been applauded globally; however the market is fickle, and over the next two weeks we will have to weather attacks from European regulators, speeches from the BoE’s Govenor and housing figures that may reveal just how averse to risk high street lenders have become…

Discuss on this on the Currency Exchange Forum