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Sterling falls due to lack of clarity over interest rates

Published:  14 February, 2011

Sterling fell against a stronger US dollar on Friday after investors sold sterling on a lack of clarity about interest rates from the Bank of England.

Sterling fell against a stronger US dollar on Friday after investors sold sterling on a lack of clarity about interest rates from the Bank of England.

Currency rates

EURO/GBP - 1.1857

US$/GBP - 1.6058
CHF/GBP
- 1.5625
CAN$/GBP
- 1.5824
AUS$/GBP
- 1.5956
ZAR/GBP
- 11.6423
JPY/GBP
- 133.55
HKD/GBP
- 12.5165
NZD/GBP
- 2.1159

SEK/GBP - 10.4115
US$/EURO
- 1.3539

Sterling had been on a strong run on speculation that stubbornly high interest rates would see an interest rate hike in the early summer. However, investors were left confused, due to the bank keeping interest rates on hold on Thursday (despite talk from key policy makers about raising interest rates to deal with inflation). This week should see a little more clarity with the latest inflation figures and the Bank of England's inflation report.

In the euro zone, the euro slipped against the US dollar despite briefly posting gains on the news that Egyptian President Mubarak had resigned. This helped boost sentiment towards the riskier euro as stability returns to the country. However, the euro struggled to break over $1.35/€1 and as such is set to struggle this week. In terms of data, the key event is GDP data that is released on Tuesday. 

In the USA, the US dollar strengthened against both the euro and sterling as a lack of clarity on UK interest rates and the euro zone debt crisis helped drive the US dollar higher. A recent run of strong US data also helped the dollar. In terms of data, there is a wide array of data including retail sales and producer price inflation.

Elsewhere, Vietnam devalued its currency for the third time in a year in an attempt to address the economic turmoil that is gripping the country. The dong has been devalued six times in three years. It could see some issues developing in South East Asia, so certainly something to keep an eye on.

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.

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