Sterling rose to a 2 month high against the euro yesterday as investors saw beyond the €85bn Irish rescue plan and sold the single currency on fears that other nations in the Euro zone would also need help. Sterling failed to capitalise on an upward revision to the UK’s growth forecasts by the Office of Budget Responsibility (“OBR”) which revised forecasts for 2010 from 1.2% to 1.8%, but cut the 2.3% forecast in 2011 to 2.1%. Sterling got stuck in the middle of the euro and US dollar, as investors moved from riskier assets into the safe haven US dollar. As a result, sterling slipped to a 2 month low against the US currency of $1.5529/£1. Other data released today showed that mortgage approvals in the UK fell to the lowest in 8 months and other figures showed a fall in house prices. This uncertainty is likely to cap any potential sterling gains against the euro, so call in now for a live exchange rate to avoid losing out.
In the Euro zone, the markets were digesting the main news from the weekend yesterday – namely the approval by EU finance ministers of a €85bn rescue package for Ireland. In addition, the outlines for a long term ‘European Stability Mechanism’ were also agreed. This is designed to be a more permanent bail out facility that will eventually force the private sector to share the burden. Despite calls from France and Germany that this idea (the brainchild of both nations) had “saved the euro”, financial markets were sceptical and as a result, the euro slipped to 2 month lows against the US dollar and sterling as investors looked to see who would be next. Call in now for a live exchange rate.
In the USA, the concerns over the future stability of the Euro zone left the US dollar in high demand as a safe haven currency. It was a quiet day for data in the region. Out today, there is consumer confidence that is expected to show a slight improvement. In addition, Federal Reserve chairman Ben Bernanke addresses a business school in Columbus. Also due out this week from the Treasury is the Treasury Currency Report, although there is no set release date for this. Get in touch now for a live exchange rate.
Elsewhere, South American currencies fell yesterday as the Euro zone debt situation deterred investors from investing in the ‘higher risk’ currencies of the Latin American states. The Mexican peso fell by 0.57% against the US dollar and the Brazilian real fell by nearly 0.4%. A fall in the price of copper saw the Chilean peso drop by 0.76% against the US dollar. Speak to one of the team about protecting yourself from adverse market movements.
EURO/GBP – 1.1859
US$/GBP – 1.5567
CHF/GBP – 1.5490
CAN$/GBP – 1.5854
AUS$/GBP – 1.6155
ZAR/GBP – 11.0888
JPY/GBP – 130.79
HKD/GBP – 12.08632
NZD/GBP – 2.08607
SEK/GBP – 10.8770
US$/EURO – 1.3128
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