Sterling strengthens as risk sentiment improves

Published: 14 November, 2011

Sterling strengthened against the US dollar on Friday as risk sentiment improved following expectations that Italy would push through austerity measures.

Smart currency rates & comments - November 14

EURO/GBP - 1.1617

US$/GBP - 1.5922

CHF/GBP - 1.4386

CAN$/GBP - 1.6201
AUS$/GBP - 1.5561
ZAR/GBP - 12.6682
JPY/GBP - 122.45
HKD/GBP - 12.3885

NZD/GBP - 2.0330
SEK/GBP - 10.5775

AED/GBP - 5.849

US$/EURO - 1.3701

Positive US data helped risk appetite as investors felt happier about the global recovery. The recent volatility in the euro zone has also seen demand for UK government bonds increase and this should keep sterling relatively well supported against the euro - despite lacklustre domestic data. Out later this week we have the Bank of England's quarterly inflation report which could be relatively downbeat and outline further quantitative easing dependant on the situation in the euro zone.

Whilst we start the week with new governments for both Greece and Italy, long term structural reform is needed in the region in order to improve its prospects. Both interim governments are however unlikely to be able to push forward with the 'harder' spending reforms and as a result we could see elections early next year. In terms of data, it is a quiet start to the week followed on Tuesday by a whole raft of 3rd quarter GDP figures that are expected to show a significant drop in output in the last few months.

In the USA, figures on Friday showed that US consumer confidence had improved to the highest level in five months, with more Americans feeling better about the economy. In terms of data, it is a relatively busy week with wholesale price inflation, retail sales figures and consumer price inflation.

Elsewhere, the minutes from the Reserve Bank of Australia's last meeting are released later today. Following the last meeting in which interest rates were cut by 0.25%, the minutes should give an interesting idea of what would prompt another cut in rates.

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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