Sterling rises against dollar due to IMF boost

Published: 19 January, 2012

Sterling hit the highest level against the US dollar for a week yesterday.

Currency Rates - January 19

EURO/GBP - 1.2001

US$/GBP - 1.5416

CHF/GBP - 1.4502

CAN$/GBP - 1.5598
AUS$/GBP - 1.4864
ZAR/GBP - 12.3176
JPY/GBP - 118.41
HKD/GBP - 11.9755

NZD/GBP - 1.9270

SEK/GBP - 10.5671

AED/GBP - 5.665

US$/EURO - 1.2846

INR/GBP - 77.775

The rise was due to news that the International Monetary Fund looked set to boost lending to support the euro and other riskier currencies. Data showed yesterday that the number of Britons claiming unemployment benefits had risen at a lower rate than expected in December. In addition, figures were released that showed that unemployment had crept higher to 8.4%. This did little to allay fears that the UK is heading for a double dip recession.

In the euro zone, the euro strengthened broadly against its major counterparts on a media report that the IMF was looking to increase its funding capacity. In addition, news circulated that credit rating agency Fitch did not expect Italy to default on its debt. Despite marginally better risk appetite, there is a high risk that negotiations between Greece and its creditors could break down that could trigger panic.

In the USA, the US dollar eased off yesterday as risk appetite was given a boost. Wholesale price inflation fell marginally and industrial production activity did not increase by as much as people had expected.

Elsewhere, crude oil prices jumped above $101 per barrel adding to gains made on Tuesday. Better than expected data and a weaker dollar helped give the commodity a boost.

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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