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Sterling fell to a four and a half month low against euro yesterday

Published:  07 October, 2010

Sterling fell to a four and a half month low against a generally stronger euro yesterday as concerns over more monetary easing hurt sterling.

Sterling fell to a four and a half month low against a generally stronger euro yesterday as concerns over more monetary easing hurt sterling.



Currency Rates
EURO/GBP - 1.136
US$/GBP - 1.589
CHF/GBP - 1.521
CAN$/GBP - 1.602
AUS$/GBP - 1.604
ZAR/GBP - 10.883
JPY/GBP - 131.01
HKD/GBP - 12.330
NZD/GBP - 2.099
HUF/GBP - 310.18



However, as has been the case of late, gains from the single currency helped boost sterling against the US dollar and saw the pound hit a high of $1.5940/£1 - the highest since early August.


The major concern for the UK is the Bank of England's monetary policy committee meeting today. After mixed messages from several key decision makers, markets are expecting the worst - more Quantitative Easing. As a result, sterling has slumped to a low of €1.1360/£1 already this morning as investors sell the pound ahead of the news. House price data did not help either, showing that prices fell by 3.6% on the month. The decision is released at 12:00pm, so expect significant sterling/ euro volatility before and after.

In the Euro zone, the euro hit an 8 month high against the US dollar above $1.39/€1 as the US dollar weakened further as speculation grew that the Federal Reserve will announce further monetary easing in the next few weeks. With the euro/ US dollar prices correlating with sterling/ US dollar, any move above $1.40/€1 will see sterling break $1.60/ £1 on US dollar.


Aside from that, German factory orders surprised to the upside yesterday after surging to 3.4% growth on the month before against expectations of 0.9% growth.


In the USA, the US dollar continued to lose ground yesterday as it loses favour amongst global investors as many are now almost certain that the Federal Reserve will start pumping more money into the US economy in the next few weeks. The ADP Non-Farm payroll data showed that the economy shed 39,000 jobs in the last month which doesn't help ahead of Friday's 'headline' Non-Farm figures.


Elsewhere, the Australian dollar hit a 27 year high against the US dollar as the Australian economy added 50,000 jobs in the last month. This revived talk of interest rate hikes after the central bank unexpectedly kept interest rates on hold earlier in the week. The Japanese yen is hovering around 15 year highs against the US dollar, which is the level at which the Japanese government started intervention on the September 15.


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.


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