Pound Euro Exchange Rate GBP/EUR Drops Ahead Of Tomorrow?s Bank Of England Decision

Modified: Tuesday, 2 April 2013 18:55 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate GBP/EUR Drops Ahead Of Tomorrow?s Bank Of England Decision

The euro appeared to defy gravity during yesterday’s session, gaining ground against Sterling in spite of more worrying news from Cyprus and a dire set of whole of eurozone unemployment figures. Investors who had previously believed that the tiny island state was out of the woods following last week’s announcement of a bailout deal from the EU/ECB/IMF ‘Troika’ appear to be mistaken. Cyprus gave every impression that it was in a state of disarray yesterday, when the nation’s policymakers revealed that savers holding over €100,000 in Cypriot bank accounts may now have to pay a levy of up to 60% on their holdings.

The reaction of Cyprus’s Finance Minister to the news regarding the increased levy was succinct – he immediately resigned. Michalis Sarris, who had helped to negotiate the controversial bailout with the ‘Troika’, stated that his resignation had been due to an official enquiry which had been ordered into the nation’s fiscal position by current leader Nicos Anastasiades. Either way, Sarris’s ‘walk the plank’ routine adds to the impression that Cyprus is a nation in turmoil.

Meanwhile, the latest set of whole of eurozone employment data showed that joblessness in the debt-troubled region had increased to a record level during February. Over one in four of Spain’s would-be-workers were without a job, but the Iberian behemoth didn’t top the unemployment charts. That dubious honour fell to Greece, which has a staggering 26.4% of its workforce currently without a job. The figures bear testimony to the ravaging toll which widespread austerity measures across the region’s peripheral states are taking. The figures are likely to bring an increase in calls for Europe’s policymakers to pursue a more fervently ‘go for growth’ set of policies.

In spite of worries over Cyprus and mass unemployment in Europe, the euro still managed to win the day against Sterling. By the European equities close, the Pound to euro exchange rate (currency : GBP EUR) was trading back down in the 1.1700s once again, having started the day at least a cent higher. It appears that fears regarding a possible increase to the UK’s £375bn Quantitative Easing policy tomorrow are draining support from the Pound.

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