UK pound is mixed today, due to the situation in the markets. Pound is down against the US dollar as the risk rally from last week loses steam, but higher against the euro as traders wonder if the deals made at the European Union summit last week will actually last.
Risk appetite has been fading as concerns about the US economy and the global economy rise. Additionally, there is some profit taking from last week’s risk rally weighing on the UK pound and other high beta currencies. Against the euro, though, the pound has a bit of an advantage, since there is speculation that some of the deals made last week will fall through. Besides, even with success in the eurozone, the euro has a long way to go.
Later this week, the Bank of England is expected to announce a rate decision. Many expected the BOE to cut rates, since the British economy is still struggling. Indeed, even though austerity measures have been in place, the deficit in Britain rose (much to the chagrin of David Cameron and George Osborne). The BOE might also decide to expand its asset purchase program, in order to use quantitative easing to boost the economy.
At 15:11 GMT GBP/USD is down to 1.5683 from the open at 1.5698. EUR/GBP is down to 0.8022 from the open at 0.8076.
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