The Single Currency Fights Back

After months of anguish and dispair for members of the EU, has the tide finally started to turn or is this just another false dawn for the single currency?

Friday has seen some of the most significant moves for the euro since the turn of the year and has brought some much needed confidence back to the markets. We have seen the EUR gain almost a cent on GBP and a staggering 2 and half cents against the USD by close of European trading. Personally I felt this current spike  was long over due and it did feel like we had almost reached a tipping point with confidence so low in Europe. Quite frankly things couldn’t of gotten much worse from an investor standpoint, without the eurozone going into a unstoppable spiral of decline.

These market movements have come about primarily due to the current EU summit and the annoucnement by leaders that they have in principal agreed to use the eurozone’s bailout fund to directly support struggling banks. This has been viewed as somewhat of a breakthrough by investors and has given the euro a significant boost across the board. We have also heard Mervyn King give a damning verdict on the UK banking sector, which is also helping the euro gain against sterling.

This news has boosted global market confidence and as such investors have pulled funds away from the ‘safe haven’ USD and this is one of the reasons it has weakened so significantly against the EUR.

Whether this agreement is sustainable only time will tell but it is certainly a step in the right direction as far as the powers that be are concerned. If you have an upcoming currency transfer that you would like to discuss, or are keen to be kept up to date with all the latest market information then pleas feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.