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Sterling slips due to North Africa and Middle East tensions

Published:  23 February, 2011

Sterling slipped against the 'safer haven' currencies yesterday as escalating tension in the Middle East and North Africa saw investors scale back holdings in riskier currencies.

Sterling slipped against the 'safer haven' currencies yesterday as escalating tension in the Middle East and North Africa saw investors scale back holdings in riskier currencies. 

Currency rates

EURO/GBP - 1.1804

US$/GBP - 1.6194
CHF/GBP
- 1.5178
CAN$/GBP
- 1.5986
AUS$/GBP
- 1.6131
ZAR/GBP
- 11.5378
JPY/GBP
- 133.91
HKD/GBP
- 12.6217
NZD/GBP
- 2.1665

SEK/GBP - 10.3735
US$/EURO
- 1.3717

 

This saw sterling slip against the US dollar, Swiss franc and Japanese yen. The only real domestic news that caused any movement was speculation over the Bank of England's minutes from their recent interest rate policy meeting. The minutes are released today at 9:30am and are important because investors hope to get a better picture of the Bank's likely timescales for an interest rate hike - and whether any additional members joined the current two in voting for.

 

In the euro zone, uncertainty over the situation in Libya - with a mounting public revolt in full swing - saw the euro suffer as a 'risky' asset, falling by 1% against the US dollar. However, positive comments by yet another European Central Bank member saw speculation over European monetary tightening start to gain momentum and the euro recovered lost ground against its counterparts. Yves Mersch was quoted as saying that the ECB should 'change its language over inflation'. Bank president Jean Claude Trichet makes a speech later on.

 

In the USA, the rising tensions in Libya have pushed the price of oil to a two-and-a-half year high as concerns over the impact on global growth weighed on investors minds. Global stocks dropped by 1% and this saw large flows into the safe haven US Government bonds and as a result, US dollar strength. Out today, there is home sales data - the markets will be closely watching what is happening in Libya.

 

Elsewhere, the catastrophic earthquake in New Zealand had a serious effect on the currency. The NZ dollar fell almost 2 % against the US dollar hitting a two month low as investors sold the currency on concerns over the economic impact of the earthquake.

 

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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