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Sterling above $1.64/£1 due to weak US data

Published:  01 August, 2011

Sterling has started the week above $1.64/£1 against the US dollar after weak US data and the ongoing deadlock over its debt ceiling.

Sterling has started the week above $1.64/£1 against the US dollar after weak US data the ongoing deadlock over its debt ceiling. 

Currency rates

EURO/GBP - 1.1402
US$/GBP
- 1.6435
CHF/GBP
- 1.3039
CAN$/GBP
- 1.5635
AUS$/GBP
- 1.4871
ZAR/GBP
- 10.9412
JPY/GBP
- 127.68
HKD/GBP
- 12.8051

NZD/GBP - 1.8622
SEK/GBP
- 10.2841
US$/EURO
- 1.4411

Whilst it appears that a deal has now been struck in the USA, the deal still needs to be approved by the Senate. Whilst the pound has benefited from being the 'best of a bad bunch' of late due to the UK's tough austerity measures, weak economic figures mean that the Bank of England is unlikely to touch interest rates for some time. Without the prospect of higher returns, investors are likely to shy away from sterling which could see it remain weak for some time.

In the euro zone, the European debt crisis is still a major concern for investors but some of the focus has been elsewhere following the ongoing impasse in the USA. Friday saw credit rating agency Moody's threaten to slash Spain's credit rating and Spain's Prime Minister called early elections. The crisis in the region is of far more concern over the long term than the US debt ceiling issues.

In the USA, the big news of the morning is that an agreement had been reached in the 11th hour to raise the US debt ceiling and avoid a default. The plan is yet to be agreed by the Senate, but contains 3 key stages. Firstly, it would see $400bn added to the ceiling with a further $500bn added later this year pending a vote of approval. A further increase of $1.5trn would also be put to a vote. Notably, the deal includes spending cuts totaling $2.4trn, but no tax rises. It is not known whether rating agencies will see this as going far enough to address the debt mountain and as a result a downgrade could still be on the cards.

Elsewhere, the Swiss franc and gold continue to surge forward as investors look to safe haven assets. In addition, silver has been incredibly volatile of late as another precious metal safe haven investment. Call in now for a live exchange rate.

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.

www.SmartWineSpirits.com


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