The British pound erased more than 1% versus the euro Tuesday, with currency moves aggravated by low liquidity as investors look forward to summer holidays.
Traders, who have been distracted by Greek debt crisis, refocused on the diverging interest rate paths of the United Kingdom and the eurozone.
Sterling dwindled to 70.33 pence per euro. Against the US dollar, the currency closed at $1.5566.
As we are in school holidays, I bet it reflects “the lower liquidity you have at this time of year,” said Hamish Pepper, FX Strategist at Barclays.
Official figures showed government borrowing dropped to its weakest in seven years. Markets also digested the hawkish tone of outgoing MPC member David Miles.
The material has been provided by InstaForex Company – www.instaforex.com