In early trading in London, the Euro saw some gains against the U.S. Dollar and the Japanese Yen as traders focused on a rally by the Euro, reaching a near record high against the Pound Sterling.
Investors are concerned that the U.K. economy will experience a significant downturn despite the government’s effort to bail out their banking sector and enacting growth enhancing fiscal measures. Consequently, the Pound Sterling fell broadly, and at one point hit its lowest level in more than a decade.
Against the U.S. Dollar, the Pound Sterling remained steady at $1.5605, gaining slightly from an earlier low of $1.5558. Against a basket of major currencies, the Pound Sterling moved to 84.6, the lowest price in more than 10 years.
Shares in Europe fell 2.3% in early morning trading, putting a cap on the Euro’s recent gains and helping to prop up the U.S. Dollar. Analysts expect this trend to continue as investors move out of risky Euro and Sterling denominated assets.
Analysts predict that growth conditions among the Euro zone economies will continue to weaken, and the pessimistic viewpoint of investors suggests that the Euro will continue to remain under pressure.