The recent moves on GBPEUR have been quite exceptional and yesterday this run continued with the rate hitting over 1.28!
Spanish borrowing costs rose one again above the 7% threshold seen as unsustainable and the outlook for the Euro which I suspect will remain together, looks to be further weakness.
When the debt crisis was only concerning Portugal, Ireland and Greece it was manageable due to their relatively low contribution to Eurozone growth (about 10%). And we always said that the real troubles would start once Italy and Spain were in the firing line which is what we have started to see in the last few weeks. This coupled with the Interest Rate cut has helped push the Euro to fresh lows against the pound, dollar, Aussie and Kiwi.
The outlook does not bode well and anyone buying Euros may at this stage do well to wait and hold out to see just how high it may go. Who is to say 1.30 is now out of the question?
This morning we have Public Sector Net Borrowing which is a good indication of the extent to which the UK government is sticking to it s deficit reduction measures. This can cause short term movements on sterling which if you are looking to trade soon, could provide the movement you are looking for.