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The euro hit an all-time high against the pound this morning amid mixed signals over the UK economy and hawkish comments from the European Central Bank (ECB).
The euro touched 0.7924 against sterling by mid-morning and was expected to peak at about 0.8 during the day.
The pound was hit by the release of data showing consumer optimism running at a 15-year low.
The consumer confidence index from GfK/NOP fell another two points in March to -19.
Sentiment was not helped by the Nationwide house price survey, which revealed a 0.6 per cent monthly drop during March to bring the annual growth rate to only 1.1 per cent, the slowest since March 1996.
The UK current account deficit provided the good news, with an improvement to £8.5 billion in the fourth quarter from a record of £19.1 billion in the third quarter, much better than the £18.5 billion expected by analysts.
GDP growth, meanwhile, was confirmed at 0.6 per cent in the fourth quarter.
Hawkish talk from Axel Weber, the ECB rate-setter, gave renewed vigour to the euro.
Mr Weber suggested that the ECB would not cut rates any time soon and said that the current interest rate level guaranteed price stability.
German import prices surprised to the upside this morning, rising by 1.1 per cent in February from January, almost twice analysts’ forecast for an increase of 0.6 per cent.
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Interesting comments from your readers about joining the euro soon ! And the positive arguement for this move is... what ? Cheaper holidays ? A little weak , isn't it ? What about the damage to the rest of our economy and the ability to set our own interest rates considering we are a home owning democracy? Didn't we learn this from the botched ERM fiasco ?
From the recent press reports (including the BBC) there are plenty of europeans who rue the day they threw away their independence to Brussels. And yes I shall be interested to hear the views of Italians when I go on my European break to Sorrento later in the year - perhaps the words 'high food inflation' might spark some discussions !
Oh, and have the EU auditors risked signing the accounts yet ? Don't hold your breath !
David, Swindon, Wiltshire
I do not think the cost of living could go higher than how it is right now in the UK (in comparison with the rest of the EMU members). The UK will only join the Eurozone when is beneficial to the UK and it looks it will be soon.
Ed, Bristol, UK
Join the euro and watch as the cost of living goes up? No thanks!
Aiden, Bradford,
If the pound joins the EURO everybody would have the benefit of a stable economy.
Just wake up kids.
Ste, maancheno,
price for friendship with USA ;D
tom, huddersfield, uk
@ 80p to the euro.....well, time for the UK to join the common currency unless you guys are waiting till the pound reaches parity........just joking...take it easy.
Pascal-pierre, Dinan, EU (France)
Does it really matter if we can't afford to go to Europe for a holiday? We can always go to America. They speak English, the accommodation is much better there as is the weather, and at 2 dollars to the pound what a bargain.
I can assure you that the Europeans will be hurting far more than we will from the strong Euro. The Americans will import less from Europe because it is cheaper for them to manufacture their own products. There will be less tourism from both the UK and US. The problem is that by the time the Europeans get around to cutting interest rates it will be too late because they will already be in recession unlike the UK and the US which thanks to the swift actions of the Fed has narrowly avoided recession.
Unless you happen to own a Spanish property with a mortgage in Euros I would say a strong Euro benefits us far more than it does them. We can grow our own tomatoes and save food miles.
Giles, Basingstoke, Hampshure
I will be visiting the UK next week on business.It will be cheaper to fill the car up with petrol in the UK than in France.This has never been the case before.
stephen hulton, eure, france
Now is when we realize the big mistake of not joining the Euro, is getting more and more expensive to go on holidays abroad (EU countries) as the rate we get is ridiculous and basic products like lettuce, tomatoes and similar go over the roof due to the strengh of the euro, what's next in the succession of cock ups of our economy? (Heathrow's new terminal is not a valid answer...)
JM, london,
Is it any surprise Sterling is so low when the BoE is at best paying lip service to fighting inflation whilst ever increasing the money supply? It is not house price data that is leading to Sterling's fall it is the BoE inflating the money supply by creating currency out of thin air. Time for a rate hike Mervyn.
Paul, Coventry,
So much for Brown`s magic touch with the UK economy! Chickens (or should we say poulets?) certainly coming home to roost from all directions just in time for the French state visit... what say those now who were keenest to stay out of the strongest currency around....?
Maybe the rest of us should apply for the generous handouts from Brussels as political refugees from Labour`s gross squandering of our national wealth and heritage?
Basil Barwick , Bexhill, Sussex, UK
Well....at 80p to the euro...it's still a good rate....what if the euro reached partity? Time to opt for the euro then....:)))
Pascal-pierre, Dinan, EU (France)
Well, now we get to see if the EU commitment to free trade is real or not. If it is real, this will lead to a reversal of our trade deficit with Europe and an acceleration of exports to Europe, and if not, we'll see EU governments pulling all kinds of illegal stunts to exclude UK imports.
It would be ironic, wouldn't it, if we finished up as members of the EU, but also excluded from their Common Market.
jon livesey, Sunnyvale, CA/US