The pound to euro rate is 0.220% higher on the day with GBP to EUR at 1.1380.
The pound to dollar rate is 0.238% lower with GBP to USD at 1.6363.
For now the pound to euro rate is being dictated to by underlying attitudes to risk on the global markets.
As this morning's dip on the FTSE 100 shows, volatility is still with us.
In such scenarios we have seen the euro lose out to both the pound and the dollar.
However, yesterday it was a different story as markets headed higher taking the euro with it.
The euro strengthened significantly against the safer pound as a result of improved investor confidence and optimism.
However the prospect of further quantitative easing still looms over the British Pound.
MPC member Miles yesterday reminded investors that the UK economy is “fragile” and maintained that more quantitative easing may be necessary. However, fellow policymaker Charles Bean has made strong indications that Adam Posen remains the only member of the MPC to have voted for quantitative easing at its last meeting. This removes some of the intrigue surrounding tomorrow’s MPC minutes.
Equities had a strong day yesterday as the market looked forward to what it hoped would be progress on the eurozone debt issue. Today’s meeting between the two eurozone heavyweights seems unlikely to produce eurozone bonds as a long-term solution to the debt crisis, but there are high hopes for a step in the right direction. This pair is trading at &euro1.1350 for now; the absence of sufficient progress in today’s talks will likely trigger a sterling rebound.
