The Pound has moved down against the Euro since Friday with the Irish rescue package agreed over the weekend helping to steady the recently fragile Euro. The certainty that this has afforded to the Eurozone has helped to steady the single currency. It is thought that Britain will contribute £7 billion of the bailout package thought to be between 80 and 90 billion Euros. The Chancellor has highlighted the connection between the two economies and Britain’s contributions will include the EU and IMF amounts as well as direct bilateral loans.
Pound Sterling – UK Markets
The Pound fell against the Euro since Friday with the focus on the Irish bailout package pushing up the single currency. The Pound closed at €1.1693, dropping by 0.5% against the single currency over the course of last week. It weakened against the Dollar by 0.8% last week to close at $1.5989.
Britain’s contribution to the Irish rescue package has been defended by the Chancellor as a necessary move to protect the British economy by ensuring stability in Ireland, one of its main trading partners.
A Rightmove survey has found that 42% of people surveyed believe that UK rents will rise 12 months from now. With mortgage lending low and UK house prices falling, there is likely to be increased demand within the rental sector.
Information of UK mortgage approvals will be released tomorrow.
US Dollar – US Markets
The Dollar closed the week overall higher against the Euro at $1.3647, gaining 0.27%. The Dollar did suffer some weakening as Federal Reserve Chairman Bernanke defended the latest stimulus measures at the ECB conference.
The Dollar Index however which measures the currency’s performance against six other major currencies has recovered by 5% from its November 4th nadir. Futures traders seem to have reversed bets that the Dollar will fall following the announcement of further quantitative easing activities.
Tomorrow steps up the data on the US economy with GDP figures, homes sales and FOMC minutes all due.
Euro – European Markets
The Euro ended the week 0.5% higher against Sterling as confidence grew that a deal could be done over the Irish debt crisis. On Sunday it emerged that Ireland will begin the formal process of accessing EU and IMF funding in order to support its beleaguered banking sector.
The exact sum is not clear, but it is rumoured to be a €90 billion package which will be provided over a three year term. Initial reaction from the foreign exchange and stock markets was positive causing the Euro to strengthen against other major currencies. EU finance minister Olli Rehn said that the provision of the loan to Ireland would help to preserve the stability of the wider Eurozone.
Some commentators are already pointing out that Portugal, Spain and Italy are other contenders who may not future rescue packages as the spotlight shifts.
Other Currencies – Highlights
The New Zealand Dollar has fallen after the rating agency Standard & Poor’s revised its outlook for the nation’s current account deficit to widen.
The nations’ Finance Minister acknowledged that this reflected the need for New Zealand to have less reliance on foreign debt.
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European Currencies Struggle to Stage a Steady Recovery