The euro has fallen further against other major currencies as fears continue over the eurozone's future. The euro fell below $1.30 for the first time since 12 January. Against the pound, one euro bought 83.85 pence, while the pound was worth 1.19 euros.
Last week, 26 of the 27 members of the European Union backed new fiscal rules, with only the UK abstaining. But many fear that the budget pact will still not be enough to prevent more countries from seeking a bailout.
Traders are now watching closely to see what kind of interest rate Italy in particular will have to pay, particularly after Germany’s Chancellor Merkel ruled out an expansion of the European Stability Mechanism (ESM), the current Eurozone bailout fund. Whether they like it or not, Germany is running things in Europe at the moment (financially speaking) and that is causing some quite vocal animosity around the member states.
The ‘deal’ forged on Friday to create a more integrated fiscal situation in Europe is in trouble after it emerged that it would be hard to get it ratified in Sweden, the Czech republic, Holland, Denmark and Finland. Whether France will ever ratify the package is also now in doubt after France’s main opposition party rejected the deal. The problem there is that there is a very good chance this party will oust President Sarkozy in the April elections so Angela Merkel may find herself in a coalition of one.
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