Currency update June 15, pound strengthens further

Published: 15 June, 2010

Currency analysis for June 15, 2010 from Smart Currency Exchange, Harpers Wine & Spirit's currency partners.

Currency Rates, June 15

EURO/GBP - 1.209
US$/GBP - 1.475
CHF/GBP - 1.691
CAN$/GBP - 1.521
AUS$/GBP - 1.728
ZAR/GBP - 11.332
JPY/GBP - 134.60
HKD/GBP - 11.499
NZD/GBP - 2.132
HUF/GBP - 338.88

Sterling rose over 1% against the US dollar yesterday to hit $1.4803/ £1. The pound jumped after the newly formed Office for Budget Responsibility forecast that government borrowing would be less than expected. The growth forecasts of the previous government were amended down, but this did not come as a surprise for many, as Alastair Darling's forecast for 3% growth in 2011 had already been heavily criticised for being too optimistic.

In addition, the markets digested the 'hawkish' (arguing for interest rate rises) comments of Bank of England member Andrew Sentence and the bank's chief economist Spencer Dale. Both were quoted in articles in the Sunday papers questioning the level of inflation and the sustainability of current monetary policy.

Inflation figures released today are expected to show a small drop to 3.4% (CPI) and 5.0% (RPI). This is above the Bank's target level of 2.5%, and the comments made fuelled speculation that we might be looking at changes to monetary policy far sooner than expected. Either way, yesterday's volatility demonstrates why it is so important to speak to a currency trader sooner rather than later.

In the Euro zone, monthly industrial production data came in slightly better than expected, but sterling took centre stage and strengthened against the euro. The pound recovered from €1.1950/ £1 to hit a high of €1.2060/ £1. So far this morning, the pound has strengthened further and is currently toying with the €1.21/£1 level.

Out later today we have German economic sentiment data which may have improved slightly following the announcement of the emergency financial package to bail out those with sovereign debt issues.

In the USA, there was little data out yesterday and the US dollar traded on sentiment alone. Risk appetite increased, as Asian markets strengthened overnight and investors bought in to riskier assets. There is some trade data released today including monthly import prices. Yet again we seem to be going from risk aversion to risk appetite on a daily basis.

Elsewhere, data showed that New Zealand house sales fell by 17% in the last year to May and house prices fell by 1.4%. This cooled the speculation of large interest rate hikes by the year end with one measure shaving 0.5% off what had been expected just 24 hours earlier.

In addition, the Reserve Bank of Australia kept rates on hold and are likely to keep rates as they are for a while as the bank assesses the fallout from the Greek crisis. Get in touch now for a live price.

* Smart Currency Exchange is a currency partner to Harpers Wine & Spirit. Harpers Wine & 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.

* To get currency udpates direct to your email then contact Richard Siddle on

richard.siddle@william-reed.co.uk

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