Currency update June 7: pound starts week on 18 month high against euro

Published: 07 June, 2010

Currency update for June 7 from Smart Currency Exchange, currency partners for Harpers Wine & Spirit. Headline news is that sterling hit a 18 month high against the euro last Friday.

Currency Rates: June 7 (AM)
EURO/GBP - 1.207
US$/GBP - 1.442
CHF/GBP - 1.680
CAN$/GBP - 1.534
AUS$/GBP - 1.771
ZAR/GBP - 11.258
JPY/GBP - 132.07
HKD/GBP - 11.250
NZD/GBP - 2.176
HUF/GBP - 348.14

Sterling fell on Friday against the US dollar but hit a one and a half year high against the euro as a worse than expected rise in US employment figures pointed towards a slower than expected US recovery.

With Europe in the midst of a debt crisis and China looking to curb spiralling growth, many analysts were hoping that the USA could provide the driving engine of a global recovery.

However, with the number of new jobs falling 100,000 short of what was expected, many analysts feel that this opens the door to a double dip recession and fresh round of risk aversion and a flight to US dollar denominated assets.

Over the weekend, news was released that David Cameron is to state that the UK economy is in a far worse state than he had initially thought. With £6bn worth of cuts already announced, this is a drop in the ocean compared to the £156bn deficit.

Following today's Prime Minister's statement we can expect some volatility on the currency markets. In terms of data, there is little out aside from some yearly retail sales data. Ensure you do not lose out. Get in touch now for a live exchange rate.

In the euro zone, the region continues to suffer from poor sentiment related to the debt crisis and the euro fell to the lowest level for four years against the US dollar last week, dipping below $1.20/ €1. The single currency is also at the lowest level since 2001 against the Japanese yen.

One survey of economists in the Daily Telegraph over the weekend suggested that the euro would be 'dead' within five years - or at the very least, certain countries would start pulling out of the currency as and when they default on loans.

Out later today, there is German factory data which is expected to show a mild decline.

In the USA, following Friday's disappointing jobs report, the US dollar and Japanese yen have both strengthened as investors look for safe haven assets to invest in. With fears of a double dip recession - where growth turns negative after a period of recovery - the US dollar again looks set to take on the role of risk sentiment indicator.

Therefore, any negative news in the UK will see sterling fall against the US dollar. In addition, perversely, any strong data for the USA will have the same effect.

Elsewhere, the pound has strengthened marginally against the Australian dollar and other 'commodity currencies' this morning, as risk aversion sees traders move from 'riskier' investments in those countries and back into safer sterling/ US dollar assets. It might be an advisable time to look at taking advantage of the improved rate if you have payments to make.

* Smart Currency Exchange is a currency partner to Harpers Wine and Spirit. Harpers Wine and Spirit has teamed up with Smart to provide readers with a free bespoke currency service.
If you are making or receiving international payments and are interested in talking to Smart please go to: www.SmartWineSpirits.com to get a FREE no obligation quote or to download the Smart Wine and Spirit report. Alternatively call Smart on 0207 898 0500.

* Get daily currency updates direct to your inbox by emailing Richard.siddle@william-reed.co.uk

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