Euro Rate Today: GBP/EUR Up Again As Investors Fear Outcome Of Latest Eurozone Debt Summit

Modified: Monday, 25 June 2012 09:49 BST - Written by Tim Boyer

STORY LINK Euro Rate Today: GBP/EUR Up Again As Investors Fear Outcome Of Latest Eurozone Debt Summit

Today’s session has opened up with risk firmly off the menu once more, as the initial showing for London’s FTSE 100 printed down by over 0.50% from Friday’s close. European bourses have been open for an hour longer than their London counterpart and they are showing losses of an even greater magnitude, with Frankfurt’s benchmark Dax index down by 1.50% in early trading.

The currency markets are giving an indication as to the reason for the shift out of risk, with GBP EUR testing higher to break to 1.2459 earlier today, hinting at a further weakening of the single currency, while the US Dollar has pushed ahead as market participants hoover-up the ultimate safe-haven asset – the US t-bill. This has taken the GBP USD exchange rate down to 1.5540 already today.

So, once again it’s Europe and the euro which is driving price action across the markets, with worries mounting that the eurozone summit due later this week, will deliver nothing more than a stand-off between Greece’s new premier Antonis Samaras and the leaders of the wealthier Northern European bloc, led by German Chancellor Angela Merkel. Before Samaras was even confirmed as the debt-addled Hellenic state’s new leader in the middle part of last week, he was angling for an easing of the austerity measures imposed on his nation by the EU/IMF/ECB ‘troika’. Fears are increasing amongst the investment community that Samaras’ demands may cause an irreparable fissure between the EU’s peripheral states and the Franco-German axis. Such a development could send mainland Europe into a fully-blown debt meltdown, as the Southern states trip over themselves to effectively renege on their debt commitments.

Given this, there could be further support for the Greenback in the near-term, particularly if this afternoon’s US New Home Sales data for May once again disappoints.

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