The Euro climbed to a new five month high this morning against the Pound riding on the expectation of a rate hike. Despite lingering debt concerns, especially Portugal’s debt crisis, the fact that the Bank of England is not expected to raise interest rates until much later in the year due to the struggling British economy, has given more strength to the Euro.
On Monday ECB Chairman Trichet’s speech held its hawkish tone from the past few weeks which helped the Single Currency rise against the Sterling yesterday, and continuing to rise today, 16 pips higher than Monday’s high. The British currency lost value as last week’s data on declining house prices and home sales provided proof of a struggling UK economy. Q4 GDP was released at 9:30GMT unchanged at negative 0.5% from previous data.
EURGBP hit a new five-month high at 0.8834. After the release of UK GDP data, EURGBP spiked over 10 pips from the level it was trading at 0.8817.