The EUR and GBP may be more volatile as usual during today's trading as markets act on pre-News Years Day news. In 2008, the EUR saw a good year as it rose rapidly against many of its major currency pairs dramatically. For example, against the GBP it rose 43%, as the pair nearly reached parity in last week. Analysts differ in opinion when it comes to the future of the EUR/GBP cross. On one hand, the pair may reach parity as Britain's economy continues to decline at a faster pace than Europe. On the other hand, the cable's weakness against the EUR may be a trend that could reverse in the coming days, weeks or months.
The Bank of England (BoE) recently announced that it would cut Interest Rates at the beginning of this year. At the same time, the President of the European Central Bank (ECB) Jean-Claude Trichet said that the Euro-Zone is unlikely to cut Interest Rates further in the near future. Therefore, when Britain cuts her Interest Rates, then the Pound is likely to record declines against the EUR, USD and other major currency pairs. The weakness of the cable will also be affected by the weakness of Britain's economy. This is vital, as Britain has been affected more negatively than her European neighbors by the global recession.
Today, the EUR and the Pound may move on economic news coming out of their countries and the United States. There may be an opportunities today to make some short-term gains in the Forex market, as the financial world gets back to business.