Pound and euro dip towards end of the week following strong start

Currencies Direct December 21st 2012 - 2 minute read

Both the pound and the euro have
seen their
currency exchange rates
drop off towards the end of this week,
but this came after a five-day period in which both were trading
higher than they have been in months thanks to increasing financial
confidence across the globe.

The euro opened the week with high
sentiments, and expectations far above those that were being seen
for other currencies, and it was again Greece that was the key
factor in how the single currency would perform; this time with a
degree of good news.

Assurances were given that the
money being given for funding to Greece in order to help it come
out of economic ruin was guaranteed, and this led to the euro
investors growing in confidence before the markets opened on
Monday, and it started at 1.3100 against the dollar thanks to
this.

This sentiment turned into
positivity in the markets throughout Monday, and the currency grew
until it reached levels that had not been seen alongside the
greenback since May of this year during the day.

Later in the week, the euro would
see stronger growth on the back of the fiscal cliff conversations
in America, with moves to avert the potential crisis having seen
risk sentiment fall away to be replaced with a quiet confidence.
The euro fed off this positivity to hit an eight-month high on
Wednesday.

This would not last for the
entirety of the week though, and poor confidence levels in Germany,
the eurozone’s biggest economy, headed into January 2013, which
were below predictions, have seen the euro fall again slightly to
1.3180 during Thursday, before it rose again slightly to sit
at 1.3200 against the dollar headed into Friday.

In terms of the pound, there was a
largely similar week for the currency exchange rate against the
dollar, and it began the week by capitalising on poor US retail
data for November, when it jumped by 0.22 per cent on Monday to hit
a two-month high of 1.6206 .

This positivity would continue
throughout the week to see the rate sit at 1.6268 on Tuesday,
continuing to rise and sit above the levels that were seen in weeks
gone by across the market.

On Wednesday, increased sentiments
were brought about by the fact that the Bank of England minutes for
the December 6th meeting saw more positivity in the UK
economy, and money was spent on the pound to keep it riding high
throughout the day.

However, this good news would stop
on Thursday, as the pounds run came to an end and it lost all of
the gains it had made on the day before to fall back to 1.6280 at
the end of trading headed into the last day of the week.

Finally, it would end the week with
further negative growth as it fell to 1.6253 ahead of lunch on
Friday against the greenback, leaving the next few days looking
uncertain after the sudden change seen at the end of this week.

Written by
Currencies Direct

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