The pound enjoyed a successful day against the single currency yesterday after consumer price inflation fell less than expected. The euro was also hit after Moody's ratings agency said the recession in Eastern Europe would affect Austrian, Italian, French, German, Belgian and Swedish banks due to their exposure to the region. The Moody’s report did cause concern in equity markets, as risk aversion reigned, capping the gains made by the pound.
In early trading today, the euro is rallying after European banks reported fourth-quarter results that beat some analysts’ forecasts, easing concern that the region’s financial crisis will worsen. Investors will have a particularly close on eye the Bank of England minutes released this morning, to give an idea of where interest rates are heading in the coming months and any further clues over the possibility of quantitative easing in the UK.
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