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Sterling continues to hold ground against euro

Published:  20 December, 2011

Sterling continued to hover around a 10 month high against the euro as investors favour sterling to the ailing single currency.

Sterling continued to hover around a 10 month high against the euro as investors favour sterling to the ailing single currency.

Currency rates - December 20

EURO/GBP - 1.1934

US$/GBP - 1.5552

CHF/GBP - 1.4579

CAN$/GBP - 1.6119
AUS$/GBP
- 1.5639
ZAR/GBP
- 12.9782
JPY/GBP
- 121.21
HKD/GBP
- 12.0995

NZD/GBP - 2.0468

SEK/GBP - 10.7532

AED/GBP - 5.71

US$/EURO - 1.3006


Sterling closed the day near earlier highs of €1.1930/£1 but still remains vulnerable to poor economic data as the UK recovery stagnates. Potential political instability in North Korea saw sterling drop against the US dollar yesterday morning but strong demand from one bank in London saw sterling recover against the US currency. With thinning trade volumes in the run up to Christmas, there is the potential for some volatile moves.

In the euro zone, the threat of further downgrades kept the euro under pressure yesterday. The 'risk off' trading conditions in the wake of the news over Kim Jong-il's death combined with this to see the euro drop against its major counterparts. The euro is down by over 2% against sterling in the past month as investors prefer the liquidity that sterling offers. Belgium's credit rating downgrade on Friday has left many feeling that other major countries in the region are set to suffer a similar fate in the coming months. 

In the USA, the US dollar strengthened overnight on safe haven demand as the news emerged of North Korean leader Kim Jong-il's death. Political uncertainty over the future of the region saw investors buying US dollars to avoid riskier investments - especially given the country's history of provocation with South Korea in times of domestic crisis. With the White House issuing a statement that it was monitoring the situation closely, the US dollar ended Monday up marginally against sterling after some bank demand saw sterling recover from earlier lows. 

Elsewhere, Chinese new home sales figures were lower than expected which is a concern for many. If the Chinese real estate market continues to suffer, many feel that this will impact on the country's ability to drive the global recovery in 2012.

 


Supplied by Nick Ryder of Smart Currency Exchange, the currency partner to Harpers Wine and Spirit who have teamed up with Smart to provide readers with a free bespoke currency service
Go to www.smartcurrencybusiness.com/winespirit for more information or call on 0207 898 0500.

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