The Euro was boosted last week by the successful bond auctions by a number of Eurozone states. The demand was sufficient enough to ease concerns that Eurozone states would struggle to raise funds on the international markets.
As a result the Euro appreciated against the US Dollar pushing EURUSD through 1.30, and EURGBP through 0.84p. This morning EURGBP trades at interbank 0.8475, forcing the pound below 1.18.
Many analysts are now predicting that the Euro could continue to recover. However, the sustainability of the Euro’s rebound remains uncertain. The Euro will face a number of significant tests including the European bank stress test results which are due to be published on June 23rd.
Elsewhere the Federal Reserve minutes hit a rather dovish tone noting that the economic outlook had softened somewhat. Interest rates in the US are therefore expected to remain at their historic lows for some time. After hitting a high above 1.54, the pound has since settled around 1.52 on the interbank market.