Sterling Higher Against USD and EUR ? Further Gains Possible

Modified: Friday, 17 February 2012 08:27 BST - Written by Tim Boyer

STORY LINK Sterling Higher Against USD and EUR ? Further Gains Possible

The Pound to Euro exchange rate (GBP EUR) is 1.2030. The Pound to Dollar exchange rate (GBP USD) is 1.5791.

The Greek debt crisis regained the top slot in the headlines which it has become accustomed to, during yesterday’s session in the currency markets. Many market analysts had thought that the stand-off regarding Greece’s qualification for its next tranche of €130bn of bail-out funding from the EU/IMF/ECB had been put to bed when the Athens parliament voted in favour of a raft of stringent austerity measures last Sunday night.

However, the ‘yes’ vote from Greece’s parliamentarians now appears to be deemed ‘not enough’ for the eurogroup of Finance Ministers. Market reports yesterday suggest that the European policy-makers used a three-hour call late on Wednesday night, to demand a timeline for the implementation of the package. Some analysts have also suggested that the eurogroup also used the conference call to make further demands for increased autonomy over the troubled Hellenic state’s future fiscal policy.

These market whispers sent the euro weaker against the Pound during yesterday’s session, seeing the GBP EUR exchange rate break to 1.2081. Further gains for the pair were prevented by the European Central Bank’s Monthly Report for February, released yesterday morning. The report reiterated the ECB’s commitment to controlling rising prices in Europe, implying that further interest rate cuts for the region will not be forthcoming for some time.

Elsewhere, last month’s US Housing Starts data, released yesterday afternoon, showed an unexpected rise from December’s counterpart number to print at 699,000. The figure caused a surge in appetite for risk in the US due to the key role the construction sector plays in the health of the US economy. This took North American share markets higher and the safe-haven US Dollar lower late yesterday, sending the GBP USD exchange rate back up to 1.5817.

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