How far will the European Central Bank go

Published on in Foreign Exchange News by

Currency Rates Overnight/Morning Ranges:

Currency Rates EUR/USD 1.4375-1.4452

Currency Rates GBP/USD 1.6481-1.6553

Currency Rates GBP/EUR 1.1428-1.1479

The question remains, how far will the European Central Bank go as the European Central Bank has come under pressure to purchase more government debt to prevent speculators from driving borrowing costs for Spain and Italy back up again. Last weeks record purchases forced yields on bonds in the respective nations down below 6 percent. Whilst the programme last week was very effective in deterring panic selling a further obstacle appears to be on the horizon.

The Euro tested the €/$ 1.4500 level yesterday, but has given back those gains and remains range bound after the Franco German meeting resulted in relatively no short term solutions to the Euro debt problems. It is reported that US Federal and state regulators are stepping up their scrutiny of Europe’s top banks, signaling growing concerns that Europe’s debt crisis could spill into the U.S banking system via these banks overseas operations. Despite a dovish tone in the MPC minutes and weaker job data yesterday, Sterling rallied and is higher today against a basket of currencies after weaker retail sales data today. The market feels more concerned over the Euro-Zone and U.S. economies than that of the U.K. There is rumoured corporate selling interest for the Pound at $ 1.6600 level and above € 1.1550.

 

EUR/USD currently 1.4396. Support 1.4200, resistance 1.4500.

GBP/USD currently 1.6500. Support 1.6300, resistance 1.6600.

GBP/EUR currently 1.1463. Support 1.1350, resistance 1.1600.

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