The euro decreased on Wednesday pressurized by the fears of debt crisis in Europe, and the pound declined versus the US dollar after the prior uprise caused by the news of a new coalition in Britain.
The euro is remaining strained, as the investors still doubt that the euro area economy is able to reduce the expenses and to increase the taxes in order to adjust the budgets.
The pound slided from the highs reached recently, when the leader of the Conservatives David Cameron became a new Prime Minister of Great Britain. “In order to solve the fundamental problem of the budget debt in the euro area much time will be needed. And the euro is expected to lower, although some traders are likely to buy it during the recoils as the number of short positions for the currency is growing”, said Mitsuru Sahara from the Bank of Tokyo-Mitsubishi UFJ. "The market will keep observing the liabilities of central banks of the euro zone and such institutions as the International Monetary Fund because of the debt problems in the region", he added. The euro declined against the US dollar by 0,03% to $1,2642, leaving the reached on Monday high of $1,3100.
"Lately, the market has been moved by political factors surrounding the euro, more than by the economic indicators. It difficult to forecast the future and this makes the risk notion more difficult for traders”, said Satori Okagawa from Sumitomo Mitsui Banking.
Cameron was named a new Prime Minister of Great Britain and promised to form a coalition government with Liberal Democrats. The market players are eager to see whether the government under the leadership of Conservatives will take urgent measures of easing the pound price.
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