With risk appetite fading, and following yesterday’s equity rout, Forex traders are looking for a little safety and stability today — especially since the eurozone continues to cause problems. This means that, while the UK pound is down against low beta currencies like the dollar and the yen, it is also gaining against the euro, since it is the European safe haven.
Difficulties with Spain continue, and concerns about the eurozone‘s possible slide into recession are the focus today. As a result, risk appetite is hard to find right now, especially when it comes to European currencies. US dollar and Japanese yen both have the upper hand against high beta currencies like the UK pound right now. However, the pound is gaining against the euro, since it has been seen as a European safe haven recently.
Even with the problems in the United Kingdom, the pound is finding support against the euro. Britain’s asset purchase program remains intact, and that could mean a weaker pound down the road, but for now the currency is moving higher against the 17-nation euro. There’s just too much uncertainty surrounding the euro right now.
At 12:58 GMT EUR/GBP is down to 0.7950 from the open at 0.7972. GBP/USD is down to 1.6167 from the open at 1.6187. GBP/JPY is down to 125.7840 from the open at 125.9250.
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