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The Pound Drops Versus the Euro

The Pound Drops Versus the Euro

The pound fell against the euro this Wednesday, as speculation on demand for euros for the latter half of the year increased. 

In addition, the Bank of England made comments which gave investors cause for heading away from sterling.  On Tuesday, a BoE policymaker said that there was a possibility that the UK could head back into a recession.

This did have its impact on the pound yet some investors said that there was still optimism in the market due to the new government’s tough budget, which it is hoped will cut the country’s deficit efficiently.

Some commented that the euro’s gains would be short-lived at best. 

Overall it is agreed that the pound has a lower risk level than the euro, especially given the current problems in the euro zone as far as national debts are concerned.

By 11AM GMT today, the euro rose 1 per cent to trade at 81.70 pence – this was not far off the day’s high of 81.80 pence.  The day before the euro had dipped to its weakest level since November 2008, at 80.67 pence.