Sterling undermined as worries over UK recovery continue

Published: 02 September, 2011

A week of disappointing economic data has undermined sterling, as worries over the UK recovery continue.

Currency rates - September 2

EURO/GBP - 1.1367
US$/GBP - 1.6192
CHF/GBP - 1.2790
CAN$/GBP - 1.5824
AUS$/GBP - 1.5131
ZAR/GBP - 11.3671
JPY/GBP - 124.35
HKD/GBP - 12.6149
NZD/GBP - 1.9042
SEK/GBP - 10.3920
AED/GBP - 5.948
US$/EURO - 1.4235

House prices continue to fall, as did service sector and manufacturing activity. Interest rates are expected to remain at a record low of 0.5% for some time yet.

In the Euro zone, the euro had a rocky week against the US dollar after the Federal Reserve indicated another possible round of quantitative easing last Friday. The euro extended its losses against the US dollar yesterday even after the release of weak US data. The euro weakened against sterling after manufacturing activity in the Euro zone shrank more than expected. Germany had the strongest manufacturing figures with 50.9, whilst Greece had the weakest at 43.3. Germany also saw its new export orders decline which has increased concerns over the euro zone economy.

The US dollar gained against a majority of its trading partners today after better than expected factory data. With an increase of 2.4% in factory activity, there is speculation that the Federal Reserve may not take further steps to stimulate the US economic recovery. There was also slight fall in US prospective unemployment figures yesterday with the national unemployment rate declining by 9.1%.

Elsewhere, the Swiss franc fell by 0.3% against the US dollar after yesterday's Swiss GDP data indicated a 0.4% slow down in growth. This is likely to be a result of a steep decline in Switzerland's investments and also a drop in the country's exports. Yesterday's data also showed China's PMI bounce back by 0.2% from July. China remains adamant that its main priority is to control inflation and meet its inflation target of 4%. An aim they would like to attain in the second half of this year.

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

Printer friendly version