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Sterling hindered by Europe and Greece debt crisis

Sterling came close to the €1.21/£1 level yesterday before weakening off in the afternoon, as the main focus remains on lack of resolution in the Europe and Greece debt crisis.

Currency rates - February 7

EURO/GBP - 1.2036

US$/GBP - 1.5814

CHF/GBP - 1.4524

CAN$/GBP - 1.5752
AUS$/GBP - 1.4643
ZAR/GBP - 11.957
JPY/GBP - 121.26
HKD/GBP - 12.2689

NZD/GBP - 1.8911

SEK/GBP - 10.6245

AED/GBP - 5.8116

US$/EURO - 1.3142

INR/GBP - 77.25

In the UK yesterday we saw the release of house price data with the price of homes rising more than expected. The UK awaits the Bank of England interest rate decision on Thursday with the expectation of the market still pointing towards an expansion of the asset purchase facility.

In the Euro zone yesterday, there was further delay with Greek leaders failing to provide a response to the demands by international creditors on economic measures despite the apparent 11am deadline. A gathering of Greek political leaders has now been pencilled in for today as they struggle for a unified response. The Greek Prime minister did manage to negotiate an agreement of cutting 1.5% of GDP in principle over the weekend but many issues were left unresolved which need to be settled before it can receive its €130bn bailout package. The German Chancellor has been quoted as saying that "time is running out" whilst saying that they refuse to acknowledge the possibility of a Greek bankruptcy. Euro zone investor confidence and German factory orders came in better than expected yesterday, but, both went largely unnoticed.

There was no significant data released in the US with the market trading on the back of continued developments in the Euro zone. Yesterday saw the dollar weaken off against both sterling and the euro despite the market fears surrounding the on-going problems in Europe. The Chairman of the Federal Bank is speaking later on today as the market looks for further insight to the state of the world's largest economy.

Elsewhere, the International Monetary Fund (IMF) has cut its growth forecasts for China with Moody's already warning that the Euro zone malaise has increased the threat of contagion to Asia, Australia and New Zealand. Further bad news for Australia came in the form of weak retail sales data; however, the Reserve Bank of Australia surprised a lot of people by keeping the interest rates set at 4.25% with their announcement first thing this morning. This has seen the Australian dollar strengthen against sterling to record highs just over the A$1.46/£1 level. Canada's purchasing manager index was well above the level the markets had anticipated and out today we see if the building permits data released can mirror this positivity.

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.