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Sterling hits high as Irish investors sell

Published:  25 November, 2010

Sterling hit a high of €1.1862/£1 against the euro as the situation in Ireland continued to see investors selling the single currency ahead of a finalised bailout plan that is expected later this week.

Sterling hit a high of €1.1862/£1 against the euro as the situation in Ireland continued to see investors selling the single currency ahead of a finalised bailout plan that is expected later this week

Currency Rates & Comments

EURO/GBP - 1.1852
US$/GBP - 1.5762
CHF/GBP - 1.5761
CAN$/GBP - 1.5934
AUS$/GBP - 1.6087
ZAR/GBP - 11.13
JPY/GBP - 131.89
HKD/GBP - 12.24
NZD/GBP -
2.072
SEK/GBP -
10.98
US$/EURO - 1.3306

Data in the UK helped lift sterling with GDP data for the 3rd Quarter unchanged from the first estimate a few weeks ago. The UK grew by 0.8% in the 3 months to October and 2.8% year on year, boosted by net trade that the relatively weak currency had attracted. With investors looking for a credible alternative to the single currency, many expect sterling to continue to gain against the euro in the coming months, but some were concerned over the level of exposure that the UK had to Ireland which could hold sterling back. In terms of data, today we have the Inflation Report hearing, in which members of the Bank of England Monetary Policy Committee testify to the Treasury Committee. 

In the Euro zone, the Irish debt crisis continues. Rating agency Standard and Poor's downgraded Ireland's sovereign rating from AA- to A as it became the second European nation to seek financial aid. This is likely to worsen the flight from Irish bonds as the Irish Government remained in talks with the EU and the IMF over a bailout package for the banking system. The bailout is likely to be in the region of €85bn. Throughout the afternoon, the Irish government announced a punishing 4 year €15bn austerity plan in order to pay for the crisis and meet the terms of the pending EU/ IMF bailout. 

In the USA, fears over heightened tensions between North and South Korea saw investors seek the safer haven US dollar, as news broke that a US aircraft carrier was on the way to provide a deterrent. However, in terms of economic data, US unemployment claims came in better than expected - falling from 441,000 last week and coming in better than expected at 434,000. New home sales came in slightly worse than expected, but after a shaky start related to Korea, the US dollar benefited from the positive jobs data. 

Elsewhere, following the better US jobs figures (the best since July 2008), investors looked to higher yielding investments and as a result, both the Australian dollar and Brazilian real strengthened against their US counterpart. 

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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