Sterling stayed strong against the single European currency this morning as concerns over Greece’s future remained stronger than concerns over the UK economy.
At 0850 GMT the euro traded at 86.75, not far above last week’s low of 86.58. The pound did see slight losses against the dollar, falling 0.7 per cent to $1.5655.
Lauren Rosborough, a currency strategist at Westpac, said she expected the sterling to continue to gain against the euro. She stated, “we expect sovereign risk in the euro zone to continue to weigh on euro/sterling and target a move towards 85.50 pence in the medium term.”
The perceived sovereign risk continues to dent sentiment towards the euro and its foreign exchange rates are expected to continue to suffer as a result.
The minutes from the Bank of England meeting are due on Wednesday and focus this week is set largely on that now. During the meeting, BoE governor Mervyn King said it was far too early to say that quantitative easing was completely over. UBS analysts stated, "we will be looking for an explanation as to why the QE programme was suspended despite the quarterly inflation report's extremely weak outlook for price pressures over the two-year policy horizon."
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