Concern that Europe’s debt crisis will worsen weakened the Euro against the British Pound.
The Pound also did better against the dollar as it appreciated against the American currency for a seventh consecutive day before tomorrow’s data that is expected to show inflation will remain higher than the government’s 3 percent target for a tenth straight month in December. This has led many to believe that the Bank of England may raise its benchmark interest rate in the third quarter.
“As long as the euro-zone debt crisis is in the focus of the market, it will be the main driver of euro-pound,” said You-Na Park, a currency strategist at Commerzbank AG in Frankfurt. “The inflation story and the chance the Bank of England might hike rates in the middle of this year is also supporting the pound.”