Sterling tumbles to a five month low against the euro

London - 13 October 2010

• Pound is up 0.3% against the dollar after Federal Reserve meeting minutes
• Mark Bolsom: “The clouds are gathering”

Sterling slumped to a five month low against the euro this morning after UK claimant count rose and UK consumer confidence fell 9 points to 53, its lowest level in a year.

Sterling fell to a five month low against the euro to 88.39 pence, although it rose against the dollar, after the release of the Federal Reserve’s meeting minutes. The pound rose 0.3 per cent to $1.5755.

Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments comments, “The clouds are gathering. The UK jobs market is coming under pressure, consumer confidence is falling, inflation is still high and quantitative easing is being openly discussed. Added to that, the Coalition’s Comprehensive Spending Review is around the corner.”

Bolsom believes that pound’s short term outlook remains weak: “Whilst the pound is being supported against the dollar, it belies the fact that it is actually quite weak. The euro is much stronger because the European Central Bank are talking about exiting their ultra loose monetary policy. Unfortunately, the UK is a long way from that.”

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