The pound to euro exchange rate is 0.58% higher on the day at 11969, the pound to dollar exchange rate is 0.25% lower at 1.5692. "The British Pound declined against the U.S Dollar earlier today, led by a decline in risk appetite, while the UK currency edged higher versus the Euro ahead of the EU summit in Brussels today, where officials are putting the finishing touches on a German-led deficit control treaty," says Adam Solomon at TorFx. The result of the treaty should be the endorsement of the €500 billion rescue fund to be set up this year. The Euro is weakening against the Pound in anticipation of the announcement but the single currency may receive a boost once officials announce the full details of the treaty. Elsewhere, a report in the UK earlier today showed that house prices were unchanged in January and from a year earlier had fallen 1.6%. The report added to the recent pessimism over the housing market and will be the start of a number of economic reports this week that give us an indication of whether the UK economy will official slip into a recession over the next quarter. The Euro was also down against the U.S Dollar as of midday in London, amid concern that tentative negotiations over a Greek restructuring deal will hamper efforts to resolve the debt crisis. The Euro also weakened as Italy raised less than its maximum target at a bond sale following Fitch Ratings downgrade of the nation’s credit rating last week. This helped to add to the overall decrease in risk appetite, which was evident in the performance of some of the higher-yielding currencies. The South African Rand and the Australian Dollar declined as stocks fell and the increased volatility in the market may see these high-yield currencies weaken further.

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