Sterling jumps to 11 month high against euro

Published: 21 December, 2011

Sterling jumped to an 11 month high against the euro yesterday as investors scrambled to buy the pound.

Currency rates - December 21

EURO/GBP - 1.1968

US$/GBP - 1.5704

CHF/GBP - 1.4586

CAN$/GBP - 1.6081
AUS$/GBP - 1.5417
ZAR/GBP - 12.7462
JPY/GBP - 122.15
HKD/GBP - 12.2231

NZD/GBP - 2.0256

SEK/GBP - 10.7314

AED/GBP - 5.771

US$/EURO - 1.3120

Better risk appetite also saw sterling gain against the US dollar as strong US and German economic data reduced demand for the safe haven US currency. Sterling's relative strength is also being put down to an expectation that the UK will continue to hold onto its prized AAA credit rating whereas many see France and Germany at risk of downgrades.

In the euro zone, a sharp drop in Spain's short term borrowing costs saw the euro strengthen against the US dollar yesterday but the single currency still struggled against sterling. Better than expected German business confidence data also helped, but the picture is still a very gloomy one for the region heading into 2012 with many concerned that European policymakers are not doing enough to solve the European debt crisis. The failure of the recent EU summit to reach a solution and the apparent confusion between leaders, the ECB and the IMF as to the best route forward has been worrying markets.

In the USA, the US housing market showed some signs of recovery yesterday as new housing builds reached the highest level in over a year, increasing by 9.3%. Builders have struggled to compete with a wide number of cheap foreclosure properties, so this data helped to give risk appetite a boost across markets as investors saw a semblance of recovery in the US economy.

Elsewhere, the Canadian dollar strengthened as inflation held steady at 2.9%. Most analysts feel that the Bank of Canada will look to start tightening monetary policy in the coming months. The Australian dollar also strengthened against the US dollar on better risk appetite and as the central bank minutes were less downbeat than expected.

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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