Currency exchange markets could give euro 'temporary relief'

The euro could be given some "temporary relief" from its downward sprial against the dollar and sterling.

An economist at Ignis Asset Management has suggested that the likelihood is for the euro to consolodate against the two major currencies over the coming weeks.

The security provided by the funding for Greece and other ailing eurozone countries was to thank for the predicted boost.

Ignis' chief economist Stuart Thompson said that the "immediate liquidity threat to the currency has been alleviated and should prompt a short recovering rally".

However, he added that over the medium-term the currency would continue to fall and could reach parity against the dollar by the end of next year.

The euro has fallen over the course of 2010, primarily due to concerns surrounding the national debt levels of Greece, Spain, Portugal and Ireland.

While the uncertainty of the UK's political future allowed the currency a brief period of growth against the pound, it has returned to its former trend following comments from European politicians over the course of this week.

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Posted by Sarah Pitton