Parity in the EUR/GBP surrency pair seemed very close during the 2 weeks of partial holiday in the Forex market. The EUR/GBP cross was already above 0.98, but now it fell back to 0.90.
The bad state of the British economy, and the sharp measures of the BOE took the pound down against the dollar. GBP/USD went as low as 1.44. The Euro wasn’t so strong against the dollar, but stable enough not to lose so much ground like the pound. The lead the cross to almost 1 EUR for one GBP.
But, the pound rallied in the last few days, when forex trading resumed at full throtle. There aren’t any real reasons for this pound comeback. The only reason could be found in technical analysis for EUR/GBP – it was overbought.
Now, the key to the pound’s direction is in the hands of Mervyn King – the BOE will take an interest rate decision, and is expected to set it at 1.50%, a drop of 0.5%.
Some traders in the Forex market are expecting a sharper drop, to 1%. Such a drop could send the pound down, and the Euro will be waiting for another chance to achieve a 1:1 ratio with the pound.
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