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Sterling weakens against euro as Greek leaders reach agreement

This week saw sterling weaken off against the euro as finalisation of the Greek 130 billion euro bailout enters the final straight.

Currency rates - January 18

EURO/GBP - 1.1916 
US$/GBP - 1.5808 
CHF/GBP - 1.4426 
CAN$/GBP - 1.5784 
AUS$/GBP -  1.4792 
ZAR/GBP - 12.1420
JPY/GBP - 122.68 
HKD/GBP - 12.2576 
NZD/GBP - 1.9075 
SEK/GBP -  10.521 
AED/GBP -  5.8014 
US$/EURO - 1.3252
INR/GBP - 78.51

A string of good data was released yesterday morning with UK manufacturing production, industrial production and trade balance data all coming out better than expected. The Bank of England confirmed market predictions by agreeing to pump another 50 billion pounds into the UK's economy whilst keeping interest rate levels at 0.5%. The injection of more money should increase the UK's protection from the threat Europe's debt crisis poses on the UK's economy. The Prime Minister stated his belief that quantitative easing is the right way to go because it supports growth, investment and lending.

Yesterday, the Greek party leaders finally reached an agreement on the austerity measures needed for the bailout. The world's eyes then looked towards Brussels last night where Euro zone finance ministers must decide whether Greece has done enough so that they can approve the bailout before the austerity measures are then subject to a vote in the Greek parliament. In other news, Standard and Poor's stated that there was a 1 in 3 chance of a credit rating cut in most Euro nations debt. The European Central Bank kept interest rates on hold yesterday at 1% as was widely anticipated.

The US saw more positive unemployment data released yesterday supporting the Chairman of the Federal Bank's comments from earlier in the week suggesting that the labour market had improved. Today the US see's the release of trade balance and consumer confidence data; furthermore, the Chairman of the Federal Bank is speaking again to provide more insight into the state of the world's largest economy.

Elsewhere, the main news this week was the surprise decision by the Reserve Bank of Australia to keep interest rates unchanged at 4.25% and the International Monetary Fund (IMF) cutting its growth forecasts for China The New Zealand dollar declined yesterday after government figures showed weak jobs growth; but, headline unemployment rate fell more than expected. There was a notable jump in Chinese inflation which was much higher than markets expected.

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.