Currency update, August 9: pound finished up 1.74% on the week

Published: 09 August, 2010

Last week was a strong one for sterling - especially against the US dollar where the pound finished up 1.74% on the week.

Currency Rates
EURO/GBP - 1.199
US$/GBP - 1.594
CHF/GBP - 1.655
CAN$/GBP - 1.637
AUS$/GBP - 1.733
ZAR/GBP - 11.517
JPY/GBP - 136.51
HKD/GBP - 12.375
NZD/GBP - 2.179
EURO/US$ - 1.328
HUF/GBP - 335.23

We saw sterling hit a 6 month high of $1.5999/ £1 against the US dollar on Friday after poor US employment data showed a worse than expected decline in July. As expected, last week saw the Bank of England Monetary Policy Committee keep interest rates and the £200bn asset purchase facility on hold. This week sees the publication of the Bank of England's inflation report on Wednesday, which should give some idea of what the bank is likely to do with monetary policy over the next few months. Many are expecting an upward revision to the interest rate forecast, but growth expectations following the new government's spending cuts are likely to be key. Also out on Wednesday is unemployment claimant count data.

In the Eurozone, the euro finished the week 0.04% up against sterling - testament to the lack of data released, but more that the focus has been between sterling and the US dollar of late. German industrial production and factory orders came in better than expected on Friday which helped the euro. Recently, there has been a slow return of confidence in the euro after the bank stress testing and Spanish bond auctions. Another quiet week for the euro, with the only potential market mover being the German GDP figures out on Friday.

In the USA, concerns over the US recovery were compounded on Friday after July's Non-Farm Payroll figures showed a drop of 131,000 jobs on the month against an expected drop of 63,000. In addition, June's figures were revised downwards by almost 100,000. This was clearly a disappointment for the markets - especially with the US interest rate decision tomorrow, and the poor figures fuelled speculation that the Federal Reserve will take further action to stimulate the economy. There is little other data out today - ensure you are taking advantage of the best prices by speaking to a trader today.

Elsewhere, Australian home loans dropped by 3.9% against an expected drop of 2%. However, this is hardly surprising after a series of interest rate hikes since October that have totalled 1.5%. These rate rises have filtered through to the 'real' economy and combined with cut backs on support to new homebuyers, private individuals have cut back on their borrowing.

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.

Printer friendly version