By TraderVox.com
Tradervox.com (Dublin) – The sterling pound rose against the euro yesterday, after dropping for the last seven days following concerns that euro area crisis may delay recovery in the kingdom. The advance came after Angela Markel, the German Chancellor, met with Greek Prime Minister Antonis Samaras to discuss austerity measures and Greece’s place in the euro area. The UK currency, however, dropped to its lowest level in a month against the US dollar after the International Monetary Fund cut the economic outlook for the UK and as a report from the country showed that manufacturing sector declined more than economist forecast. Pound’s advance against the euro was supported by a report from the National Institute of Economic and Social Research, showing that the UK economy grew at the fastest pace in five years in the last quarter.
According to Neil Jones, a London-based European hedge-fund head at the Mizuho Corporate Bank, the lack of agreement between Greece and its creditors is forcing investors to lose confidence in the euro hence selling it against the euro which translates to its weakness against the pound. The pound strengthened against the euro as Angela Markel indicated that she wants Greece to remain in the euro zone. She said that little remains to be done and they have tackled the bigger part of the crisis. She expressed confidence in the ability of Greece to meet the austerity measures put in place.
The situation in Greece is on the spotlight again as the European Central Bank, IMF, and the European Commission review the progress made in ensuring austerity measures are adhered to in Greece before the payment of 31 billion euros from bailout commitment. The involvement of European Commission and the IMF has been opposed by Spain, which has refrained from asking for bailout citing stringent prerequisite terms.
The pound strengthened by 0.5 percent against the euro to trade at 80.55 pence per euro at the close of trading in London yesterday. The UK currency dropped by 0.2 percent against the dollar to trade at $1.5988.
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