Pound euro exchange rate likely to benefit from support around 1.27 while GBP-USD levels look impressive

Details

Published on Monday, 20 August 2012 09:25

Written by Will Peters

International Money Transfers at our sister site

For now GBP-EUR remains range-bound and is likely to benefit from some support at 1.27.

The pound to euro pair is 0.11 pct in the red at 1.2714.

The pound to dollar is 0.12 pct in the blue at 1.5716.

Sterling continues to trade close to 1.27 as Spain puts pressure on the ECB to act.

Spain has urged the ECB to commit to large-scale purchases of Spanish bonds before it asks for a bailout, which contradicts Draghi’s assertion that a request for help must precede ECB intervention.


It is this muddle that is a key risk to further euro strength, and "we may have to wait until the ECB’s September meeting for any sort of clarity to emerge with respect to impending bond market action and the conditions that will be attached," notes Richard Driver at Caxton FX.

For now GBP-EUR remains range-bound and is likely to benefit from some support at 1.27.

Headlines from the weekend suggest that the hole in Greece’s finances is larger than initially estimated, but the euro is as yet unaffected.

With regards to GBP-USD Another attempt beyond $1.5750 has again failed, though current levels remain impressive.

Sterling is trading only half a cent off its three-and-a-half high of $1.5750. Time and again we are seeing this pair fail above $1.57 and this was the case again on Friday.

The preliminary US consumer sentiment figure was encouraging on Friday, which will add to the more optimistic view of US growth moving forward. This should see QE3 bets decline and the dollar find more favour.

"For now though, this pair trades at $1.57, which continues to represent a good level at which to buy US dollars," says Driver.