Sterling retains current highs
Sterling hit new highs of 1.2495 against the euro this week, challenging the psychological ceiling of 1.25, as fears surrounding the Eurozone dominated the global markets.
Sterling hit new highs of 1.2495 against the euro this week, challenging the psychological ceiling of 1.25, as fears surrounding the Eurozone dominated the global markets.
Currency rates - May 11
EURO/GBP - 1.2472
US$/GBP - 1.6115
CHF/GBP - 1.4981
CAN$/GBP - 1.6182
AUS$/GBP - 1.6071
ZAR/GBP - 13.031
JPY/GBP - 128.57
HKD/GBP - 12.5122
NZD/GBP - 2.0591
SEK/GBP - 11.226
AED/GBP - 5.9194
US$/EURO - 1.2917
INR/GBP - 86.42
The main data released out of the UK this week was the Bank of England's decision to keep interest rates and the asset purchase facility unchanged. Sterling was buoyed by the news that the central bank had not felt the need to inject any more money into the economy despite the UK being in a technical recession.
The euro suffered heavy losses this week as fears surrounding the effect the French election result may have on the makeup of the Eurozone, fears that Greece could soon leave the euro and fears over the state of the Spanish economy gripped the market. The Greek elections results caused doubts that the Greece would stay in the euro much longer as anti-austerity parties took over a great deal of power from the two main pro-bailout parties. To date, no coalition has been formed; but, another election in June is looking ever more likely which would mean that a coalition may be formed between parties who want to tear up the current austerity deal. The EU will announce its economic forecasts for the 27 member states today which could provide more volatility if the predictions are significantly different from the public's perception.
The US dollar was relatively strong this week as investors sought "safer havens" following the unnerving news coming from Europe. On the data front jobless claims came in as expected whilst trade balance data showed the deficit widened by more than expected.
Elsewhere, the commodity backed currencies were the worst performing currencies this week led by a global "flight to safety" due to the on-going developments in the Eurozone. The Japanese yen was particularly strong due to its safe haven status. The Australian dollar recovered some of its early loses on Thursday as unemployment data came in much better than expected somewhat reducing the necessity of another interest rate cut in the short term. Chinese trade balance figures showed a sharp drop in imports stoking fears that growth is slowing in world's second largest economy, with inflation data released early this morning.
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