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Sterling in favour due to ongoing euro zone issues

This week sterling has seen sterling trend in favour against the euro, due to a lack of resolution surrounding the ongoing euro zone issues.

Currency rates - February 2

EURO/GBP - 1.2048
US$/GBP - 1.5816 
CHF/GBP - 1.4499 
CAN$/GBP - 1.5812
AUS$/GBP - 1.4788
ZAR/GBP - 12.1131
JPY/GBP - 120.51 
HKD/GBP - 12.27 
NZD/GBP - 1.9034 
SEK/GBP - 10.647
AED/GBP - 5.8111
US$/EURO - 1.3139
INR/GBP - 77.32

However, UK Construction Purchasing Managers Index [PMI] came in worse than expected dampening the positive outlook on the UK economy following the release of Wednesdays better than expected manufacturing data. Out today Services PMI with give further reflection on the stability of the economy in the UK and provide insight to the potential risk of a double dip recession.

The EU Economic Summit and Greece's struggle to seal a debt agreement with private investors has dominated the headlines this week. Rumours suggest that a deal should be completed before the weekend; however, the chairman of euro zone finance ministers, said talks on the bond swap were "ultra-difficult." The Greek government still needs to reach a deal and secure a second European Union-led bailout by March 20 to avoid defaulting on its debt and the euro zone finance ministers will hold a meeting on Monday in an attempt to wrap up the package.

The US dollar was treated to a mixed bag of unemployment data released in the US over the last couple of days and awaits the release of the non-farm employment change and unemployment rate out later today. The Federal Reserve Chairman spoke yesterday reiterating that the US Recovery been slow and that there is a long way to go before job market returns to normal. He also noted that the Global economy "appears to be slowing" and that events in Europe may harm U.S. economy. Strong manufacturing PMI data released across Europe, UK and China drove risk appetite for the later part of the weak devaluing the dollar.

Elsewhere, the Swiss franc encroached on the €1.20/Chf1 peg this week and the Swiss National Bank interim president did not hesitate to state that he is ready to buy currency in unlimited quantities to defend the peg. Further speculation regarding central bank intervention was rife as rumours suggested that the Bank of Japan could look to devalue the yen and the Finance Minister said that the government is "calmly watching market moves very closely" and pledged to "respond by taking firm measures."

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.