Pound to euro declines; Rightmove house prices data in strong performance

Last Updated on Monday, 20 February 2012 14:00 Written by Will Peters Monday, 20 February 2012 13:58

The pound to euro exchange rate is currently at 1.1968, some 0.67% lower than Friday's close.

The declines come in line with positive trading on global markets.

Pound to euro declined despite supportive news coming out of the UK economy - the Rightmove house prices were strong at 4.1% M/M and 1.4% Y/Y.

---

Advertisement - Article Continues Below

---

"In line with overall euro strength, EUR/GBP tested Friday’s highs this morning, but the strong UK house prices prevented further EUR/GBP gains. The pair is again in
the 0.8325 area at the moment of writing. Later today, the calendar is the UK is thin," says a morning exchange rate note from KBC Bank.

So, the focus will be on comments from EU policymakers ahead of the Eurogroup meeting.

This meeting will have to remove most obstacles to finalise a 2nd Greek bailout.

As is the case for EUR/USD, we expect sentiment to stay supportive for the EUR/GBP cross rate, but we don’t expect a major break higher.

EUR/GBP gained a few ticks at the start of trading in Europe.

However, the pair failed overcome the first intraday resistance in the 0.8320 area.

Cable and EUR/USD still profited more or less equally from the improvement in global sentiment on risk.

Elsewhere, we expect the PMIs and German IFO to gain most attention. We expect both to show further signs of German resilience, while growth in the euro area remains very weak. In the absence of large upside surprises, we continue to expect substantial loosening by the ECB and for this to drag the EUR lower against GBP and the USD over the medium term.