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Sterling hits 16 month high against euro

Published:  06 January, 2012

Sterling rose to the highest level against the euro for 16 months, hitting €1.2113/£1, the highest since late 2010.

Sterling rose to the highest level against the euro for 16 months, hitting €1.2113/£1, the highest since late 2010.

Currency rates - January 6

EURO/GBP - 1.2118
US$/GBP - 1.5494
CHF/GBP - 1.4785
CAN$/GBP - 1.5794
AUS$/GBP - 1.5136
ZAR/GBP - 12.6388
JPY/GBP - 119.55
HKD/GBP - 12.0345
NZD/GBP - 1.9860
SEK/GBP - 10.7388
AED/GBP - 5.691
US$/EURO - 1.2775
INR/GBP - 81.80

The view that the UK economy will outperform the euro zone was given a boost by the news that service sector activity had beaten expectations to reach the highest level since July. Sterling however dragged against the US dollar as strong US employment figures boosted the US dollar and concerns over the euro zone boosted safe haven demand for the US currency.

 

The euro continued its downward spiral yesterday hitting multi-month lows against the US dollar and the pound. The issue this week is that investors are concerned over the ability of countries to raise funds on the bond markets. Having entered a period of bond auctions, Germany's auction this week was pretty lacklustre and France had to sell at increased interest rates to attract investors yesterday. This saw a sell-off of euros again and with markets expecting sterling to breach €1.25/£1 by mid 2012.



In the USA, the US dollar strengthened yesterday after better than expected unemployment figures added to a recent run of positive data coming out of the USA. Non manufacturing activity data slipped slightly, but today's main attraction is the non-farm payroll figures that are expected to show a boost to the number of people employed.



Elsewhere, it has been a volatile week for the commodity backed currencies, with safe haven demand for the US dollar and risk aversion impacting on volatility. Interest rates in Australia could potentially drop in the coming weeks.



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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