The Euro remained under heavy selling pressure as renewed concerns Euro Zone’s stability continued to weigh on the European currency, pulling it down against its major currency counterparts. The European currency struck 81.215 pence, a new 1-½ year low against the Pound, as speculations increased Euro Zone’s debt crisis would leave the region fiscally weaker than the UK, which has already set to implement stringent budget cuts.
Meanwhile, the Swiss Franc has proved itself to be the safe haven of all currencies. The Swiss Franc, nicknamed the Swissy, appreciated against both the Dollar and the Euro over the course of the month. The Euro slipped 0.1% to 1.3336CHF, after falling 1.5% on Monday; while the Dollar moved to 1.0875CHF.
The Euro fell below the $1.23 mark after interbank Euro lending rates hit their highest levels in almost seven months. The Euro lost 0.8% against the Dollar on Monday, as concerns increased that the banks scheduled repayment of 442 billion Euros to the ECB could leave a potential liquidity shortfall of over 100 billion Euros in the financial system.
The Pound struck $1.5130, its highest level in seven weeks, on Monday after the BOE policy maker Andrew Sentance stated that strict tax hikes and spending cuts outlined in last week’s budget would not diminish the need for a rate hike.
However, some analysts remain wary of the affects that the drastic budget cuts will have on the British economy and on the Sterling. They say that even if the spending cuts and tax hikes help the U.K improve its fiscal situation, they may hinder the nation’s economic recovery, which could cause the central bank to hold interest rates at their record low level.
Written by Finexo.com