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Sterling continues slide against dollar and yen

Published:  31 May, 2012

Sterling continued to weaken off to a four month low against the US dollar and a three month low against the Japanese yen.

Sterling continued to weaken off to a four month low against the US dollar and a three month low against the Japanese yen.

Currency rates - May 31

EURO/GBP - 1.2494
US$/GBP - 1.5484
CHF/GBP - 1.5007
CAN$/GBP - 1.5928
AUS$/GBP - 1.5925
ZAR/GBP - 13.1969
JPY/GBP - 122.12
HKD/GBP - 12.0212
NZD/GBP - 2.0504
SEK/GBP - 11.207
AED/GBP - 5.7019
US$/EURO - 1.2392
INR/GBP - 87.39

It also continued to remain fairly range bound against the majority of other currencies as risk aversion drove the market. The monthly change in net lending to individuals and mortgage approvals figures beat expectations yesterday, but did little to sterling's relative strength. With very little data out today the market will look elsewhere for influence.

The euro weakened off to a two year low against the US dollar of 1.2385 as investors continue to flee the euro and look for safer havens for their money. The Italian bench mark 10 year bond auction was poorly received with yields breaching the 6% level. The news that the EU had suggested it would consider letting the ESM (European Stability Mechanism) lend directly to troubled banks provided some temporary respite for the euro; but, it was short lived.  French jobless claims also reached the highest levels since 1999. Today, the main scheduled news released is the Irish vote on a referendum to accept or reject the European Union's Stability Treaty.

The US dollar was very strong yesterday, strengthening against the majority of currencies hitting a four month high against sterling and a two year high against the euro due to its safe haven status. Pending home sales data released was well below market expectations dropping by the most in a year; but, the US dollar remained strong in a risk adverse market. The estimated change in the number of people employed in the US and the number of people claiming unemployment benefits will be released today ahead of the highly influential Non-Farm pay rolls employment data released on Friday.

Elsewhere, the Japanese yen continued to strengthen against the majority of currencies yesterday due to its safe haven status. The Australian dollar performed poorly yesterday, partly due to the risk adverse market; but, also due to the retail sales data released showing a contraction when 0.2% growth was expected. First thing this morning building approvals and private capital expenditure were released in Australia as well as business confidence figures from New Zealand.