Currency - GBP / Euro

For months we have been impressed by how well the Euro has maintained its strength and mightily surprised that it hasn’t weakened to a greater extent. Oddly though, we were all a little taken aback when it did finally dive and we saw the Pound rally from €1.16 to €1.21 in a matter of 3 weeks. That rally was clearly overextended at that level and a period of correction was inevitable. So when the Pound started to give up some of those gains on Wednesday and continued to do so into Friday, we shouldn’t have been at all surprised. However, there was undoubtedly more bad news to come from the beleaguered Eurozone and another punch up to €1.21 was highly likely. That move finally happened on Friday; triggered by the credit ratings downgrades as mentioned in the main section above. I won't bore you by going over it again but you can see the effect in today's rates. Euro buyers who don’t like risk should be buying anywhere around €1.20 or above if you can get it but protect against a proper decline. Euro sellers may want to protect against a break of €1.21 and take advantage if there is a drop to €1.18.