Currency update: G20 meetings get underway

Published: 03 November, 2011

Sterling regained some of the ground it lost against the US dollar on Tuesday as the surge in demand for safe haven assets waned, however the pound failed to capitalise on its move towards €1.17/£1.

Currency rates - November 3
EURO/GBP - 1.1615
US$/GBP - 1.5902
CHF/GBP - 1.4119
CAN$/GBP - 1.6219
AUS$/GBP - 1.5561
ZAR/GBP - 12.8182
JPY/GBP - 124.12
HKD/GBP - 12.3564
NZD/GBP - 2.0268
SEK/GBP - 10.5971
AED/GBP - 5.842
US$/EURO - 1.3672

UK construction activity figures beat expectations, showing expansion against an expected decline. This helped investors to have more faith in the UK recovery, but it is still very fragile and subject to further shocks in future. Out later today we have UK services sector activity which is a key figure - GDP growth numbers showed an expansion in this sector.

In the euro zone, with the G20 meetings getting underway in Cannes today there will certainly be a lot to talk about. Following the shock announcement by Greek PM George Papandreou that Greece will hold a referendum on the EU bailout, it was announced last night that this is to be held on the December 4. Greece has €8.1bn worth of bond redemptions due on December 19 and lacks the funds (without the bailout) to repay these. If the country votes no, it will not receive any funding and default. This has the potential to cause chaos in the markets.

In the USA, the US dollar continues to trade in response to the global risk sentiment and the currency made modest gains following on from the Federal Reserve's FOMC statement which was broadly negative in its tone.
Elsewhere, Scandinavian currencies and other risk based currencies have suffered as investors look elsewhere to invest on the news of the potential euro break down. Sterling has made gains across the board.

Supplied by Nick Ryder of Smart Currency Exchange, the currency partner to Harpers Wine and Spirit who have teamed up with Smart to provide readers with a free bespoke currency service. Go to www.smartcurrencybusiness.com/winespirit for more information or call on 0207 898 0500.

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