Posted on Tuesday, December 29, 2015
The euro strengthened against sterling over the week. It was no major achievement: Every currency strengthened against sterling, which was dragged lower by the expectation of higher UK interest rates fading ever further into the future. The pound fell by an average of -1.1% against the other dozen most actively-traded currencies. It lost a fraction more than that, just over a cent and a half, to the euro. The euro did nothing to distinguish itself. Indeed, the Spanish general election last Sunday served to highlight the political risks to European currency union. Just a couple of months after Portugal delivered a messy election result Spain did the same, with no overall majority and the prospect of anti-austerity government policies. There were no Euroland economic statistics of any consequence and there will not be any on the coming week either. Look for more of the same.