The Euro hit a two month high against the Dollar before running into large selling resistance and falling back towards 1.25. Sterling fell below the key 1.50 level over the weekend as fears over the UK economic recovery remerged.
The IMF’s warning that spending cuts and tax increases announced by the coalition Government will reduce future growth levels has pushed the pound lower against the Dollar and the Euro, but the key driver of the Sterling sell off seems to be technical. Failure to break through the 1.5260 level signalled to traders to realise profits, sending the Pound lower.
Although German manufacturers posted some impressive sales figures at the end of last week and boosted confidence in the continuing Eurozone economic recovery, fears over manufacturing and unemployment data in periphery member nations is swamping any and all positive news from Germany. Added to the muted response to the Stress test methodology there is enough news around the keep the Euro suppressed for the next few days.
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