GBP falls for fourth day, EUR surges

Published: Wednesday, 16 January 2013 10:00 BST - Written by Toni Johnson

STORY LINK GBP falls for fourth day, EUR surges

The Pound weakened for a fourth day against the US Dollar and is heading for its lowest level for nine months against the Euro.

The declines are a result of UK Prime Minister David Cameron’s plan to renegotiate Britain’s membership within the European Union. Economists believe that any renegotiations could cause the nation’s corporate investment climate to suffer.

The Pound was also weakened against the majority of its peers after David Riley, the head of global sovereign ratings at the credit ratings agency Fitch, warned that the UKs AAA rating is not assured.

Riley said that Chancellor George Osborne's admission in last month's autumn statement that he would miss his 2016 target date for public debt to start falling had been a "negative event" for the UK. He stressed that a downgrade of the AAA rating was not a "decided event"; but warned that Britain remained vulnerable to fresh economic shocks elsewhere in the world.

The Euro meanwhile has strengthened against the majority of its most traded peers after continuing to rally amid growing signs that the three-year long turmoil created by the Euro crisis is fading and after the ECB President Mario Draghi last week signalled no immediate plans to ease monetary easing further.
The rapid ascent of the Euro in recent days has however caused some investors and European finance leaders to warn against the dangers of having such a high exchange rate.

“It was said last year that the Euro-zone was at risk of breaking and I said last year that this won’t happen,” Juncker, who steps down this month as head of the so-called Eurogroup, told an annual gathering of business leaders in Luxembourg. “The Euro-zone has become more stable after lots of efforts, some from me,” Juncker said, adding that now “the Euro foreign-exchange rate is dangerously high.”

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