Pound To Euro Rate Drops As Eurogroup Approves ?130bn Greek Bail-Out

Published: Tuesday, 13 March 2012 09:00 BST - Written by David Woodsmith

STORY LINK Pound To Euro Rate Drops As Eurogroup Approves ?130bn Greek Bail-Out

The Pound Sterling to US Dollar exchange rate is 1.5643. The Pound Sterling to Euro exchange rate is 1.1885.

Yesterday’s session in the currency markets was once again dominated by Greece’s ongoing debt crisis. As ever, nothing was finally resolved, but the debt-laden Hellenic state lived to fight another day, as per usual.

Yesterday’s obstacle for Greece came in the form of a eurogroup summit in Brussels. The meeting concluded with eurozone Finance Ministers rubber-stamping the second €130bn tranche of bail-out funding – apparently 100% good news for the struggling nation. However, the announcement did come with one caveat – payment of the funding was dependent on the International Monetary Fund making a contribution. This meant that the summit had failed to deliver the complete short-term closure which investors holding euro-denominated assets had been seeking.

The partial uncertainty failed to hold back the euro during yesterday’s session. Support for the single currency saw the GBP EUR exchange rate drop to as low as 1.1874 overnight.

Elsewhere, the US Dollar was well-bid yesterday, as uncertainty hit share markets thanks to poor Chinese trade balance data and nervousness over the outcome of the Brussels eurogroup meeting. This saw the GBP USD exchange rate drop as low as 1.5603 yesterday afternoon. The last time the pair traded below this level was in the final week of January.

Risk sentiment may see a pick-up in early trading today, as data released overnight showed that Industrial Output in India’s mammoth economy expanded by an annualised 6.8% in January. Analysts had expressed fears that the Indian economy was heading towards a period of flat growth, which would have been damaging for the global economic recovery. These concerns will have been assuaged by last night’s numbers, giving the potential for Dollar weakness today.

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