Forex focus: pound cannot escape Continental woes As currency analyst Josh Ferry Woodard of TorFX points out, "For all the PIGS's (Portugal, Italy, Greece and Spain) flaws, they are not the only misbehaving animals in the eurozone farmyard. The Netherlands are not expected to meet the 3pc budget deficit target within the next three years; Austria, Belgium, Cyprus, Malta, Slovenia and Slovakia are all set to run deficits above 3pc this year, while France and Ireland have both breached the criteria for three years running. If France, often seen as the eurozone's second in command, is not abiding by the rules what's to stop the PIGS from rebelling in a similar way? With the euro area in such a state you'd think the pound would be storming ahead. At just over €1.20 to the pound, it has reached 19-month highs against the single currency but appears to be sticking at this level. There are a number of reasons for this. Firstly, as World First's Jeremy Cook asserts, the likelihood is that the deterioration in the world growth profile will not miss these shores in the three months to June. Secondly, the strength of the German and northern states' economies is helping to maintain the eurozone's trading strength and the ECB has shown it is prepared to provide liquidity to the region's banks, says Charles Purdy of Smart Currency Exchange. This doesn't mean that we won't see further weakening from the euro over time. Far from it, the debt problems for Spain, Italy and Portugal are significant and will be very difficult to resolve. Bailouts are very much on the cards," he adds. Thirdly, sterling has not been able take advantage of the euro weakness because are in a similar situation to many of our European neighbours. "The only benefit, and it turns out it is a major one, is that the UK still has its own currency to facilitate the adjustments," notes Alistair Cotton of Currencies Direct. For those who remember the heady days before the credit crunch when the pound bought €1.40, the improved exchange rate could still seem pretty meagre. Mind you, most of the currency analysts are say sterling should hold its current level of around €1.20 and recommend those moving money from the UK to the Continent to lock in at these rates.