The pound to euro rate has ebbed lower on the currency markets today, GBP to EUR is 0.199% lower at 1.1384. Meanwhile the euro to dollar exchange rate has now moved higher by 0.236% and EUR USD is sitting at 1.4432. Looking back to yesterday we see that markets were taken aback by poor growth figures coming out of Europe. However, Sara Yates, a currency analyst with Barclays Capital has said that despite the poor showing in the Eurozone data she still sees the euro appreciating against the pound and US dollar. In a note to clients she says: "The weakening picture in the euro area poses downside risks to our economists' call for the ECB to tighten again in Q4 11. However, as the market is pricing a cut by Q1 12, these downside risks are not news for the EUR. "More importantly, as yields were virtually unchanged by today's surprise, it suggests the market was largely priced for today's more measured euro area performance. As such, the euro has been stable versus the USD despite the negative news. "Nonetheless, we still expect the EUR to appreciate against the USD and GBP. While euro area fundamentals have worsened, domestic conditions in the US are worse. For the UK, the external environment is crucial, meaning a weaker euro area and/or weak US economy will also weigh on GBP. "Indeed, in our opinion, were it not for the ongoing euro political concerns, the EUR would be stronger against a basket of G10 currencies. And as risk aversion abates over the coming months, we expect the EUR to push higher."

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