Sterling rises versus euro as Ireland debt crises continues

Tom Tong16/Nov/2010Currency Updates

GBP

The pound was down against the dollar but rose near to a seven-week high against the euro amid uncertainty over whether Ireland will ask for emergency funding. Sterling is becoming a more attractive option for investors as they choose between the sovereign debt issues of the euro and diluting of the dollar in the US. However, house builder persimmon warned yesterday that the UK housing market was struggling and remained flat throughout autumn.

USD

The US dollar climbed to a six-week high against major currencies on Monday as worries about Ireland’s debt crisis persisted, hurting the euro, while rising US bond yields increased the greenback’s appeal. Additionally, positive retail sales figures showed a jump due to solid motor sales figures. The figures showed the largest gains in seven months, suggesting the US economy was bouncing back from a soft patch in the summer. However, it was not all good news as a manufacturing gauge in New York State fell to its lowest levels since April 2009.

EUR

The euro slumped against the dollar and most other currencies as EU finance ministers are set to meet for emergency talks over the sovereign debt crisis today. The euro slumped against the dollar on Monday as unease about the European sovereign crisis continues to eat away at the single currency. Speculation is rife that Ireland will formally ask the European Union for emergency funding, whilst the Portuguese finance minister warns of contagion and Greece revises its deficit up for a third time as it breaches bailout terms. With focus now firmly back on the sovereign risk crisis within the Eurozone, the euro is expected to remain under pressure. Reports have indicated that Ireland may seek up to €80bn from the European Financial Stability Fund. EU officials have expressed concern that on-going uncertainty surrounding Ireland’s financial health could trigger financial instability in other Eurozone countries.

Elsewhere, stats released from the EU statistics agency revealed that the Eurozone’s balance in trades of good with the rest of the world has swung into a surplus, compared to a 5 billion euro deficit in August.

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Written by Tom Tong

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