Pound to take a fresh crack at 1.18 against the EUR as sentiment towards the EUR turns negative

The pound to euro exchange rate is 0.08 pct higher on a day-to-day basis at 1.1779.

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With recent momentum appearing to have turned against the euro in recent sessions we ask whether the pound sterling will be able to register fresh advances against the euro.

Assisting the British pound today was news from Righmove that showed house prices have risen once more as  the amount of credit finding its way into the UK economy is certainly growing and this will bode well for the UK currency in the long term - a strong currency requires a strong economy which is of course underpinned by strong credit conditions.

According to Richard Driver at Caxton FX a crack at the 1.18 level is certainly possible:

"We have been up around current levels close to €1.18 several times this month but each time the rate has headed lower. A break of €1.18 should clear the way for higher climbs but until then we remain very much within the range. The data calendar is pretty quiet today and focus will largely be on the G8 meeting in Northern Ireland."

However, analysts are warning that there will be little action on currency markets in the first half of the week, so any fresh moves higher may be a while off yet.

It's all eyes on the US this week

For exchange rate markets, and indeed markets in general, the week will be dominated by the US Federal Reserve meeting.

Charles Purdy, Director of Smart Currency Exchange says that while the US Fed dominates the agenda the UK is not completely devoid of data releases:

"UK economic data last week was limited and the main influence on global currency markets was the on-going discussion on whether or not the US would continue their programme of quantitative easing. A bit more light should be shed on this as we have the Federal Reserve meeting mid-week followed by their announcement of the meetings outcome. Here in the UK we have a range of different releases.

"Inflation for May is expected to come in slightly ahead of the previous month at 2.6% and retail sales figures for May are expected to have recovered from the fall of 1.3% in April.

"We also have the release of the minutes of the last meeting for the Bank of England monetary policy committee on Wednesday. Expectations are for no changes in the voting patterns from the last few minutes so anything different would have an immediate effect on sterling. So after a steady week last week we could see sterling moving quickly as the data r