Subscriber login Close [x]
remember me
You are not logged in.

Currency update, October 4 - sterling falls but performs well against the dollar

Published:  04 October, 2010

Sterling fell to a four month low on Friday against euro as worries over further Quantitative Easing and poor data saw investors sell the pound.

Currency Rates
EURO/GBP - 1.151
US$/GBP - 1.578
CHF/GBP - 1.537
CAN$/GBP - 1.611
AUS$/GBP - 1.631
ZAR/GBP - 10.985
JPY/GBP - 131.37
HKD/GBP - 12.244
NZD/GBP - 2.129
US$/EURO - 1.370
HUF/GBP - 315.96

Sterling fell below €1.15/£1 and dropped to a low of €1.1423/£1 in Asian trading overnight. Against the US dollar, sterling performed well as investors looked elsewhere over concerns that the Federal Reserve would pump more money into the economy over the next few weeks. Data on Friday showed that the UK manufacturing sector weakened more than expected in September, as export orders dropped fro the first time in a year. In a speech to the conservative party conference, Chancellor George Osborne has said that the UK has moved out of the financial "Danger Zone" and is set for a steady and sustainable recovery. Data out later is expected to show that UK construction activity declined for the 4th consecutive month and slumping to the lowest level since February.

In the Euro zone, the euro had a strong week as concerns over the state of the UK and US recoveries helped boost demand for the currency. News that fewer banks had drawn down on available credit from the European Central Bank helped boost confidence. Market reaction seems fairly bizarre, as when news was announced that Spain's credit rating had been downgraded and that the bill for the Irish banking bailout would probably top €29bn - the financial markets hardly batted an eyelid. There are some serious structural issues that need resolving but it seems that the markets feel it is a better bet than the US dollar or sterling at the moment.

In the USA, concerns over further Quantitative Easing and monetary stimulus are still hurting the US dollar - expect this to continue in the run up to the next meeting of the Federal Reserve on 2nd November. Pending home sales and factory order data are both expected to show lower rates of growth later today.

Elsewhere, Australian inflation jumped to a 4 month high in September with the annual rate growing to 3.2%. This boosted expectations that the Australian central bank would look to start raising interest rates again at this week's policy meeting. In addition, the Japanese yen tumbled on speculation that the Bank of Japan would start monetary easing to help weaken the currency and improve exports.

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: to get a FREE no obligation quote or to download the Smart Wine and Spirit report. Alternatively call Smart on 0207 898 0500.