UK pound is gaining against a weaker euro today, heading higher as worries about Greek debt resume. Greek talks have been suspended for a short time, even though Greek PM Lucas Papademos said that some progress had been made recently. The pound, though, is down against the US dollar as risk aversion sets in.
Sterling is pulling back today against the US dollar, following a general rally in January. Equities saw some gains recently, thanks to improved economic data, and that helped the pound. Now, though, risk aversion is creeping back in and equities are falling as uncertainty about Greece and the eurozone makes an appearance.
There are other challenges facing the UK pound as well. While sterling could remain supported against the euro as long as the Greek debt issue is a concern, it is likely to maintain weakness against the US dollar as concerns about Britain’s economy also remain.
Many expect that another round of quantitative easing will be announced for Britain after the Bank of England meeting this coming week. The UK economy is still in a precarious position with BOE policymakers trying to balance the higher than expected inflation with slow economic growth.
At 16:15 GMT EUR/GBP is lower at 0.8290, down from the open at 0.8296. GBP/USD is showing some spunk against the US dollar, turning to gains, with 1.5817, higher than the open at 1.5807.
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