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Sterling strengthens against US dollar as investors reverse bets

Published:  21 November, 2011

Sterling strengthened against the US dollar on Friday as investors who had placed bets against sterling reversed them ahead of the weekend.

Currency Rates
EURO/GBP - 1.1654
US$/GBP - 1.5698
CHF/GBP - 1.4439
CAN$/GBP - 1.6204
AUS$/GBP - 1.5846
ZAR/GBP - 12.9742
JPY/GBP - 120.55
HKD/GBP - 12.2270
NZD/GBP - 2.0771
SEK/GBP - 10.6870
AED/GBP - 5.765
US$/EURO - 1.3450

In addition, there was speculation that the ECB would start lending to the IMF in order to bail out troubled European countries. Sterling slipped slightly against the euro as a result, but this was due to the fact that the pound has now become some what of a safe haven currency in the face of a growing crisis in the euro zone and as a result, sterling is likely to gain against the euro if investors become concerned. This week, we have the Bank of England's meeting minutes and the firstrevision of 3rd Quarter GDP - both of which could cause significant volatility.

In the euro zone, it was yet another volatile week, with a sharp rise in government bond yields across the board demonstrating the 'contagion' that so many analysts have feared for some time. One piece of relatively positive data over the weekend was the news of the crushing election victory by Spain's centre right. The strong majority should give the new government the ability to push through the tough austerity measures required and to (hopefully) keep the country's bond prices down.

It is a potentially big week in the USA, with the looming deadline of the so-called 'super-committee'. This was a bi-partisan body set up in the wake of the debt ceiling debacle in August to agree a further $1.2trn of spending cuts in order to avoid automatic cuts in 2013. Given the fractious nature of US politics, if the talks do breakdown it could cause some issues in the markets yet again.

Elsewhere, the resurgence of violence in Egypt has put many analysts on edge. The lack of political reform since the uprising earlier this year has caused some to worry about the situation in the region.

The commodity backed currencies held their own yesterday. The euro zone crisis is having an effect on business confidence worldwide and although still growing the Far East is still dependent on what happens in the northern hemisphere.

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 for more information or call on 0207 898 0500.