Sterling posted solid gains against a broadly weaker single currency yesterday, rallying to a close of 1.1155 as the EU commission voiced concern over the eurozone economy.
- The pound erased Monday’s losses against the euro as demand for the single currency waned in the wake of an EU report that spoke of a “highly uncertain” recovery in the eurozone.
- Fears over the banking sector within the 16-nation bloc also brought the single currency under pressure, with the EU Commission estimating huge potential bank losses in 2010.
- In addition, European stocks fell sharply in the wake of news that UBS, the Swiss bank, reported a greater than expected loss. In the UK, RBS announced it was taking more public funding and Lloyds Banking Group announced a rights issue.
- In the afternoon, data revealed that UK house prices rose by another 1.2% in October, according to the Halifax, which is the fourth monthly increase in a row .
- Nationally, house prices have risen by 2.9% since the end of 2008 and they are now 7.1% higher than six months ago when prices reached a trough in April, which buoyed demand for the UK currency.