Sterling headed for weekly loss against euro

The pound rallied against the single currency yesterday and reversed some of the previous day’s losses, as equity markets rose on the back of the government’s plan to insure banks’ toxic assets. The British government announced a scheme under which it could end up insuring more than £500 billion of bad assets in an attempt to get lending flowing again, with tentative signs showing that the worst of the banking crisis may be passing. The FTSE 100 responded well to this, boosting demand for riskier currencies, with sterling being one of the major beneficiaries.

There are no major announcements due in the UK today, whilst the eurozone reveals their Consumer Price Index figures this morning, giving an indication of inflation at present.

GBPEUR: 1 week chart. Click on graph to enlarge.