Pound euro exchange rate pushes higher, Sterling advances as there is too much risk inherent in backing EUR either way

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Published on Wednesday, 05 September 2012 11:18

Written by Will Peters

The euro is finding the going tough this morning in line with weak global markets and the apprehension ahead of tomorrow's big ECB decision.

The pound to euro exchange rate is 0.32 pct higher on a day-by-day basis at 1.2672.

The pound sterling (Currency:GBP) is looking strong across the board this morning ahead of an imminent decision on monetary policy out of the Bank of England.

There is all-round consensus that the Bank will have no new announcements for the markets. Markets will like this stability ahead of what is sure to be an interesting day over at the ECB tomorrow.


There is simply too much risk involved in backing the euro either way this morning, and sterling is capitalising on this fact.

Also backing sterling is the accidental release of the UK services figures late in yesterday's session which gave the UK currency an initial nudge higher.

"The August growth figure from the UK services sector, which was due out this morning at 09:30, was accidentally released yesterday afternoon. One might wonder how this was even possible but while someone at Reuters may have been asked to clear their desk, the market was left to reflect on an impressive UK services performance in August," says Richard Driver at Caxton FX.

Elsewhere we heard more words of encouragement from EU leaders which has helped put a floor underneath the euro. French President Hollande urged his fellow leaders to come to a solution for Greece and Spain at the EU Summit in October.

"Today is the eve of the week’s main event – the ECB’s monthly meeting and decision, where we will find out if Draghi is ready to back up his promises with action, or whether the safety catch will remain on the bazooka for yet another month," says Driver.