Pound to euro exchange rate fails to breach 1.21 but still looking strong, GBP/USD records solid gains

Last Updated on Friday, 17 February 2012 10:00 Written by Rob Samson Friday, 17 February 2012 09:57

The pound to euro exchange rate is 0.13% higher on yesterday's close at 1.2049.

The pound sterling spent another day on the front foot against the euro yesterday, though once again failed to breach 1.21.

Sterling still couldn’t muster the momentum to post new highs against the euro yesterday.

Richard Driver, FX analyst at Caxton Fx says:

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"Positive headlines surrounding Greece helped the euro recoup some ground and it is looking like a deal could emerge on Monday, though we have heard this all before and the market is unlikely to get ahead of itself.

"It sounds as if Greece’s second bailout will include stringent controls on spending. The ECB also boosted confidence by indicating a debt swap agreement.

"Having failed to breach the €1.21 level, we may see sterling come under pressure as we edge closer to a Greek deal, particularly if UK retail sales are weak this morning."

Elsewhere, the pound to dollar exchange rate (GBP/USD) is 0.36% higher at 1.5856.

A strong US manufacturing figure and advancing US stocks weakened the dollar and saw this pair erase this week’s losses.  

The Philly Fed Manufacturing Index printed another good figure yesterday, to fuel the improved sentiment on display yesterday. Greek and EU officials are also doing a good job of raising hopes for some closure on the bailout issue, which again is increasing risk appetite away from the US dollar.

This pair is back up trading at $1.58 and could get another nudge higher early next week, though we are sticking to our bet on a reversal soon.