The importance of Europe's Stability and Growth Pact has been underlined on Wednesday when the euro lost a full cent against the dollar, despite plummeting US stocks in that session. It can also be seen how currency traders are becoming somewhat apprehensive with the euro through the currency's inability to mimic the strength of the pound against the dollar. Since the inception of the euro, the positive correlation between GBP/USD and EUR/USD has averaged above the 0.75 suggesting a strong positive relationship between the two European currencies and how they behave against the greenback. Thus, when one strengthens (declines) against the dollar, the other does the same. Yet, over the past 2 weeks, sterling had been powering ahead to fresh 26-month highs against the dollar, while the euro has shown increased hesitancy since hitting 28-month highs against the dollar.
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