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Currency update, July 14: inflation helps boost sterling

Published:  14 July, 2010


Currency analysis for July 14 from Smart Currency Exchange: inflation figures a boost for sterling
For specialist drinks currency advice go to www.smartwinespirits.com:

Currency analysis for July 14 from Smart Currency Exchange: inflation figures a boost for sterling
For specialist drinks currency advice go to www.smartwinespirits.com:

Currency rates, July 14
EURO/GBP - 1.198
US$/GBP - 1.525
CHF/GBP - 1.613
CAN$/GBP - 1.573
AUS$/GBP - 1.726
ZAR/GBP - 11.502
JPY/GBP - 135.54
HKD/GBP - 11.858
NZD/GBP - 2.120
HUF/GBP - 332.59

Sterling rose yesterday against the US dollar after inflation data remained above the Bank of England's target rate.


The CPI year on year inflation figure fell from 3.4% for May to 3.2% for June. The Bank's target rate is 2%, and many investors felt that yesterday's figures showed that inflation is stubbornly high and may prompt the Bank of England to raise interest rates earlier than predicted.

Many currently expect this to start happening in the second quarter of next year, but the figures yesterday meant there was speculation that this could happen sooner. As a result the pound recovered by nearly 1% on the previous day, hitting a high of $1.5258/ £1 in early trading this morning - recovering from $1.4949/ £1 on Monday.

Out today there is claimant count unemployment data for the UK, which is expected to show a drop of 20,000 and a more inclusive measure of employment is likely to show little growth in the sector.

In the euro zone, data released yesterday showed that economic confidence fell in Germany. The ZEW economic sentiment survey is a key measure of European sentiment as a whole, and it showed a worse than expected drop from 28.7 to 21.2.

Overall though, the euro has taken a slight back seat this week against key data from the UK, and the euro held its ground against the pound - maintaining a price below €1.20/£1. Out later today we have inflation and industrial production data for the euro zone.

In the USA, retail sales for June are expected to show a small monthly rise. Retail sales fell by 1% in May, and the trade balance unexpectedly worsened as data out yesterday showed that the deficit had widened by $2.3bn.

Elsewhere, New Zealand's retail sales slumped by 0.2% in June - far less than the expected 0.6% upturn and marking the second month's consecutive decline. Australian consumer confidence jumped by 11.1% - the most in 13 months - presumably related to the ousting of former Prime Minister Kevin Rudd.


* Smart Currency Exchange is a currency partner to Harpers Wine and Spirit. Harpers Wine and Spirit has teamed up with Smart to provide readers with a free bespoke currency service.

If you are making or receiving international payments and are interested in talking to Smart please go to: www.SmartWineSpirits.com to get a FREE no obligation quote or to download the Smart Wine and Spirit report. Alternatively call Smart on 0207 898 0500.

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