Pound Euro Rate Spirals On Renewed Greek Debt Fears

Modified: Friday, 30 March 2012 08:42 BST - Written by Ben Hughes

STORY LINK Pound Euro Rate Spirals On Renewed Greek Debt Fears

The Pound Sterling To Euro Exchange Rate is 1.1988.

There was fresh bad news for the euro during yesterday’s session in the currency markets, as leading ratings agency Standard & Poors commented that debt-addled Hellenic economy Greece may have to undertake further fiscal re-structuring in order to reach a resolution to its problems.

Greece’s woes had dropped out of the headlines over the past couple of weeks, thanks to the EU/IMF/ECB’s confirmation that it would be providing the ailing state with a €130bn second bail-out. Renewed fears over the eurozone’s indebtedness took the euro lower against both Sterling and the US Dollar on the day. This saw the GBP EUR exchange rate break to 1.2002 in overnight trading – its highest level for six sessions.

The euro had come under further selling pressure earlier in the day, when the results of March’s whole-of-eurozone consumer confidence survey were released, yesterday morning. The figures disappointed, showing at weaker than expected levels of responses to the consumer confidence, economic confidence and industrial confidence enquiries.

However, it wasn’t all bad news for the eurozone, as official government figures showed that unemployment in the region’s leading economy dropped to 6.7%, its lowest level since the early 1990s. It appears that the single economic area’s most economically active state continues to show remarkable resilience given the turmoil in Europe’s peripheral nations.

Today’s highlights are likely to come from this morning’s eurozone CPI inflation data and this afternoon’s annualised Canadian GDP numbers for January. If the European price rise numbers show at above the anticipated 2.5% annualised number, then investors are likely to up their expectations of a near-term ECB interest rate hike, which could trigger a recovery for the single currency.

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