Euro unable to hold gains
The Euro was unable to hold post-Fed gains on Thursday and retreated sharply after the European open. There were further important reservations surrounding the Euro-Zone economy, especially with on-going fears surrounding energy prices and gas supplies. ECB council member Visco also stated that the central bank, so far, has not needed to worry about the exchange rate which dampened confidence and the Euro dipped to lows around 1.0115 against the dollar.
The FTSE 100 index was unable to respond to Wall Street gains which hampered the UK currency to some extent, especially with markets fretting over the very weak UK balance of payments position which leaves the currency vulnerable if capital inflows are subdued.
Sterling was unable to challenge the 1.2200 area against the dollar and dipped near to lows near 1.2100 in choppy trading before a recovery to above 1.2150. The Euro dipped to fresh 3-month lows just below 0.8350 before a recovery to 0.8380 and Sterling was resilient on the crosses.
Risk appetite held firm on Friday which provided net Sterling support, although there was selling interest close to the 1.2200 level against the dollar.