Sterling To Euro Exchange Rate Could Break To New 18-Month High Following Soros? Words

Published: Thursday, 12 April 2012 09:00 BST - Written by Tim Boyer

STORY LINK Sterling To Euro Exchange Rate Could Break To New 18-Month High Following Soros? Words

The spotlight settled on the Euro once again during yesterday’s session in the currency markets, as a mix of conjecture and bond market movements determined price action for the single currency.

There was good news for the eurozone in the early part of the session, as Italian and Spanish bond yields dropped back, following market whispers which suggested that the European Central Bank is set to re-enter Europe’s bond markets in an attempt to provide support for debt-burdened states.

Ironically, the rumours appeared to favour the Australian and New Zealand Dollars on the session, more than the euro, as they caused global appetite for risk to improve, leading institutional investors to shift their funds out of safe havens and into higher-risk plays. Market participants’ reluctance to leave their funds in euro-denominated assets may have been triggered by comments by leading financial guru George Soros yesterday afternoon. Soros stated that Germany is attempting to impose a near-impossible task on the eurozone in enforcing unworkable austerity measures on the region’s peripheral states. He went on to assert that the single currency, in its current state, is ‘broken’ and needs to be mended.

In spite of Soros’ words, there was a pronounced uptick in appetite for risk on the day, which caused a forward move for world stock markets, with London’s FTSE 100 gaining 0.70% on the day, while Frankfurt’s Dax registered even healthier gains.

The euro will gain further direction later this morning, with the release of April’s ECB Monthly Report. Any hint from the eurozone’s policy-makers that a cut in the region’s interest rate is on the cards, could see the GBP EUR exchange rate to a new 18-month high, above its current high of 1.2168.

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