Sterling reached 3.5 year highs yesterday against euro

Published: 17 July, 2012

Sterling had a strong day yesterday reaching fresh 3.5 year highs of €1.2765/£1 against the euro while performing relatively well against the majority of other currencies despite the IMF downgrading the UK's growth forecast in 2012 from 0.8% to 0.2%.

Currency Rates
EURO/GBP - 1.2732
US$/GBP - 1.5642
CHF/GBP - 1.5303
CAN$/GBP - 1.5872
AUS$/GBP - 1.5201
ZAR/GBP - 12.8071
JPY/GBP - 123.56
HKD/GBP - 12.1432
NZD/GBP - 1.9588
SEK/GBP - 10.9981
AED/GBP - 5.7453
US$/EURO - 1.2286
INR/GBP - 86.28

Inflation data in the form of Consumer Price Index figures is released today which is expected to show a figure of 2.8% matching last month's change, while the governor of the Bank of England is also speaking.

The euro had a relatively poor day reaching new lows against sterling and dipping back below the 1.22 level against the US dollar before recovering in the afternoon. The euro weakened as a report suggested that the European Central Bank may be changing their mind on the seniority of debt, meaning that senior bank debt holders should now share in any losses that may occur which is the opposite to what was implied a few weeks ago. German business climate sentiment and (ZEW) economic sentiment data will be the main data released today.

The US dollar started the day fairly strong before weakening in the afternoon as core retail sales and retail sales figures missed expectations dropping by 0.4% and 0.5% respectively when small gains had been anticipated. Core CPI data is the main news on the agenda today while the chairman of the Federal Reserve Bank is also speaking.

Elsewhere, the Japanese yen was the best performing currency yesterday strengthening against all the major currencies as risk aversion was the main driver in the market despite the Japanese markets being shut for a bank holiday, while the Swedish krona was one of the worst performers. Early this morning, minutes from the latest Australian monetary policy meeting were released and this afternoon the Bank of Canada is expected to keep interest rates on hold.

http://www.youtube.com/watch?v=066Zp7XcLFw&feature=youtu.be

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