05 May 2009

Euro Weakens as ECB Speculation Mounts

The UK has recently always been predicted to be the country which would suffer the longest through this recession.

This has not improved much in the European Commission's latest report, which has revised the outlook for most of Europe. Most of Europe looks set for decline and in fact Britain is now set to lose around 4 to 4.5 per cent this year - an increase on Alistair Darling's Budget prediction of 3.5 per cent. However, it is Germany who are set to see the biggest decline in 2009 - 5.5 per cent. This decline is the worst in Europe.

The European Central Bank are set to meet later this week to decide on the new interest rate - most are speculating that it will be dropped by 25 base points to 1 per cent. Other measures are set to be introduced in an effort to push the EU economy into more action, and this kind of speculation has had its effect on the foreign exchange market. The euro fell against 13 of the 16 most-traded currencies, including the US dollar and the yen. The outlook for the euro remains weak.

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