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EUR under pressure along with GBP

EUR under pressure along with GBP

George Osborne used his annual address at the Lord Mayor’s banquet last night to announce that Northern Rock would be put up for sale, or at least part of it. During the financial crisis the bank was split into a ‘good bank’ containing the branches, retail deposits and the less risky mortgage book and a ‘bad bank’ containing the more toxic assets. The Treasury will sell the ‘good bank’ and retain the ‘bad bank’ with the sale expected to raise around £ 1billion.

Will this mean we get all our money back? Well, the government injected £1.4 billion into Northern Rock so the sale of the good bank is likely to leave us some £400 million out of pocket. However, the bad bank is still under government control and actually made £400 million profit before tax last year, so it’s likely over the coming years that we will make a profit from propping up Northern Rock.

The Chancellor also confirmed in his speech that UK banks’ retail operations – the branches that you and I use – will be ring fenced from their investment arms. This is intended to protect retail client’s deposits if a bank was to encounter financial difficulty in their investment divisions.

Talking of divisions, Germany and France continue to disagree on how to prevent the Eurozone’s first ever sovereign debt default. The French want Greece to stick to the terms of their existing debt repayments while the Germans want the maturity dates of existing debt facilities extended.

Without going into the finer technicalities, it is crucial to stress the importance of reaching a solution. Many European banks- still rebuilding their balance sheets – are exposed to Greek debt and with Greece in political and financial turmoil, failure to reach agreement could have wider repercussions for not only Greece, but other highly indebted European countries and the euro zone in general.

In morning trading, the pound weakened on worse than expected retail sales figures, with sales falling 1.4% from last month. This caused the pound to fall against the euro and dollar, trading at 1.1425 and 1.6126 respectively.

What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.

Currency UK will then offer you the best exchange rates available and ensure that you subsequent international transfers are handled as quickly and as efficiently as possible.

Contact us now on +44 (0)20 7738 0777 or click here.

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