Although Cyprus was able to make a last minute deal with EU Finance Ministers, and so secure the ten billion Euro bailout the nation desperately needs, the common currency has since lost the ground it gained after the news first broke this morning.
The Pound Sterling Exchange Rate was in the region of 1.1771 against the Euro as of 15:34 pm
The Pound initially fell against the Euro as European trade began. The common currency was able to advance on the majority of its rivals as risk appetite increased in the aftermath of a bailout package being secured.
However, Sterling has since gained against its rival – trading in the region of 85.1 pence per Euro – as concerns mount that worst isn’t over.
Some industry experts fear that the Cyprus crisis, which has dominated headlines for the past week, may have irreparably damaged people’s faith in the European financial system.
Furthermore, whilst Cyprus has pledged its determination to stay part of the 17-member Eurozone, one Cypriot lawmaker has asserted that leaving the currency bloc might be in Cyprus’ best interests.
Nicholas Papadopoulos stated: ‘We wish to stay in the Eurozone but leaving the Eurozone now is a valid point that has to be explored. We are going to enter into a very deep recession, high unemployment with no prospect of growth and we need to examine if there are other ways to solve these hurdles.’
Papadopoulos’ comments allowed the Pound to recoup earlier losses.
Sterling can expect to experience significant movement on Wednesday as final 4Q GDP figures for the UK are released.
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