Currency analysis, December 10: sterling slips against US dollar

Published: 10 December, 2010

Currency analysis for December 10 from Smart Currency Exchange: sterling slips against US dollar. For bespoke currency advice for the drinks industry go to www.smartwinespirits.com

Currency rates
EURO/GBP - 1.1941
US$/GBP - 1.5804
CHF/GBP - 1.5514
CAN$/GBP - 1.5963
AUS$/GBP - 1.6027
ZAR/GBP - 10.8990
JPY/GBP - 132.26
HKD/GBP - 12.28
NZD/GBP - 2.1112
SEK/GBP - 10.8962
US$/EURO - 1.3235

Sterling slipped against the US dollar yesterday after worries over the single currency and euro zone debt crisis brought the pound down against a stronger US dollar. There was no reaction from sterling prices as the Bank of England kept interest rates and monetary policy on hold. Whilst this was widely expected, it was a credit rating downgrade in Ireland that dented sterling. Rating agency Fitch downgraded the credit rating of Ireland after they recently secured an 85 billion euro bailout. The UK economy relies heavily upon the euro zone as a trading partner and as a result, issues in the region can impact prospects for the UK recovery. Sterling was not helped by details that showed that house prices fell 0.1% in the last month. Out later today, there is production data which could have a significant effect on sterling pricing.

In the Euro zone, the euro fell against the US dollar yesterday following the rating downgrade and also on the news that one of the Irish political parties would vote against the emergency European bailout for the country. Euro fell by around 0.5% against the US dollar to hit a low of $1.3169/€1 on the day.

In the USA, a larger than expected decline in the number of claims for unemployment helped bolster the view that the economic recovery is gaining traction. The recent extension of tax breaks has left many expecting a growth boost as consumers and businesses spend additional disposable income. However, some analysts feel that this extension is de facto Quantitative Easing and will add to the deficit and cause more pain in the long term. In terms of data, today sees the US trade balance figures which could see some significant volatility.

Elsewhere, a survey by the Bank of Japan is expected to show that confidence amongst Japanese firms fell for the first time in 7 quarters as the strong yen has left international prospects uncertain.

Smart Currency Exchange is a currency partner to Harpers Wine & Spirit. Harpers Wine & 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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