Welcome to our account of movement in the foreign exchange rates overnight.
Progress, but is it enough? The foreign exchange rates remain unchanged today, as markets continue to digest the encouraging news from last week’s EU summit. Among other things, politicians agreed to allow the EU rescue fund to recapitalise banks directly, meaning that loans will not be added to each nation’s public debt. This will be a balm to Spain, which is set to receive €100bn in aid.
However, though markets responded jubilantly to these announcements, there are questions about whether they are sufficient. Can, for instance, the legal changes to the rescue fund be implemented quickly enough? And is the rescue fund big enough to refinance troubled European banks? Without answers to these questions, the euro could soon slide again.
In the UK meanwhile, the fallout from the LIBOR scandal continues to rock the pound. Over the weekend, calls for a criminal investigation into the manipulation of the rate came to the fore, while George Osborne swore to ban failed bank chiefs from finding new roles in the industry. All this could keep the pound under pressure for some time.
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