Sterling finishes down against the euro

The pound weakened against the euro yesterday by 0.35 cents (0.31%), finishing the day at 1.1347.

• In a quiet day’s trading because of the UK Bank Holiday, the euro strengthened against sterling on Monday as some investors took advantage to push sterling lower.
  
• This move came despite worse-than-expected German Ifo Business Climate figures, which revealed a rise to just 84.2 this month from 83.7 in April, well below the 85.1 analysts had predicted.
  
• On Friday, the pound weakened against the euro after Thursday’s announcement that a ratings agency had lowered its UK outlook from “stable” to “negative” reduced investor appetite for the UK currency.
  
• Standard & Poor’s justified their decision to lower its rating based on the fact that UK government debt could near 100% of GDP. Sterling’s fall came despite S&P affirming that they were not looking to cut Britain’s ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings.
  
• Elsewhere, data released on Friday morning showed the UK economy contracted an unrevised 1.9% in the first three months of the year.
  
• In trading so far today, the pound has pared all of Monday’s losses against the euro after a report in The Daily Telegraph revealed that German regulator BaFin had warned that toxic debt of the country’s banks would blow up “like a grenade” unless they took advantage of government bad-bank plans to prepare for the next phase of the crisis.
  
• There are no major announcements due in the eurozone or UK today.