The Euro has taken a mighty fall and sits at its lowest level against the Pound since August 2009. On the eve of the election, Euro-zone debt fears have overwhelmed any vulnerability in Sterling, making this in fact the best GBP / EUR exchange rate for Euro buyers in nine months. The Euro has also continued to weaken against the US Dollar, falling to its lowest level for a year.

Euro – European Markets

The Euro has dropped to a one year low against the Dollar and a nine month low against Sterling as fears mount over the Euro-zone’s ability to generate economic recovery. Although Greece’s rescue package has now been formalised, skepticism surrounding the likely success of this and reductions in the credit ratings of Portugal and Spain have taken their toll. Concern that Greece’s debt woes are spreading to other Euro members and that they too may require rescue-deals is the major factor influencing global currency markets. Investors have suggested that Spain, Portugal and then Ireland and Italy are becoming the primary causes for concern. Greece has been paralysed by public and private sector strikes as protesters are unhappy with the spending cuts and tax rises they will have to suffer in order for the rescue package to be delivered.

Pound Sterling - UK markets

The markets have opened this morning with the best GBP / EUR exchange rate for Euro buyers since August 2009 which is extremely significant given that we may be about to enter a period of uncertainty given tomorrow’s election. GBP / EUR was trading at 1.16921 today at 10am. To buy your Euros today or fix a rate for future use, speak to your broker. The GBP / EUR rate has moved in this manner due to extreme weakness in the Euro and therefore may be clouding the true state of the Pound. However, the Pound has also been strengthening against its most-active counterparts. This has been partly attributed to some poll suggestions of a clear Conservative majority win this week rather than a hung Parliament situation. However, this could also be down to a short-term pre-election surge in the Pound. It’s a cliff hanger situation. An additional issue on the horizon is that as countries in the Euro-zone experience credit rating downgrades, the UK must be cautious. Whichever party forms the UK Government will have to contend with the possibility of Britain losing its AAA grade credit rating.

US Dollar – US Markets

The U.S. Dollar has tremendously benefited from Euro weakness as demand for it (as the world’s reserve currency) has surged. It sits at the highest rate against the Euro for a year and has also risen against the Canadian Dollar to the highest point in five weeks. Mortgage Applications and Employment Change key data are due today which are likely to continue the US’s positive spate of economic growth figures.

Other Currencies – Highlights

The Euro’s effect on global stocks and economies has caused Asian currencies to slump. China’s anticipated currency reforms to encourage exchange rate flexibility are also under scrutiny. The Yuan has been pegged to the US Dollar for twenty one months. Government advisors have today acknowledged that the Greek debt situation may lead to more caution regarding any reforms but also should not stand in their way.