Sterling at its weakest against the Euro for six months

Sterling dropped below 1.1300 against the Euro for the first time in 6 months this morning as Markets digest the prospect of further Quantitative Easing in the UK.

Whilst the MPC fell short of recommending further stimulus measures in the October meeting, members intimated the likelihood of such measures would be appropriate in the near future - all eyes now look forward to the November meeting.

Jason Gaywood, Senior FX Consultant of currency specialists HiFX, comments "The Pound was also hit by the announcement by the UK Government of up to 500,000 Public Sector job losses over the coming three years. This coupled with strong economic data from the Eurozone on Thursday morning left dealers with only one sensible option - sell Sterling and buy the Euro. Significantly, the value of the Pound was steady against the Dollar as the US also faces the prospect of further QE and reduced growth as we head into the fourth quarter of 2010."

Gaywood continues "At the time of writing GBP/EUR was trading at 1.1250 (88.9 pence) and highlights the risk that it could fall further to 1.1000 (90.9 pence). EU Importers and holidaymakers alike will need to pay particular attention to these moves in the coming weeks."