Currency update June 18: sterling under pressure

Published: 18 June, 2010

Currency analysis update, June 18 from Smart Currency Exchange: sterling under pressure.

Currency analysis update, June 18 from Smart Currency Exchange: sterling is under pressure this morning as the markets digest the chancellor's speech that all but disbands the FSA in its current form.

Currency Rates, June 18, AM:

EURO/GBP - 1.198
US$/GBP - 1.485
CHF/GBP - 1.651
CAN$/GBP - 1.527
AUS$/GBP - 1.709
ZAR/GBP - 11.207
JPY/GBP - 134.81
HKD/GBP - 11.563
NZD/GBP - 2.108
HUF/GBP - 335.78

Sterling pushed near one month highs against the US dollar yesterday as UK retail sales data came in much better than expected and risk appetite increased after a Spanish bond auction was well received. The pound rose to a high of $1.4838/£1 as retail sales jumped 0.6% in May following increased demand for electrical goods in preparation for the World Cup.

Sterling was initially under pressure this morning, as the markets digested the chancellor's speech last night that all but disbanded the FSA in its current form. Mervyn King also caused sentiment towards the pound to dip as he made clear that monetary policy would have to take into account the upcoming 'fiscal squeeze' that would follow the budget next week.

In the eurozone, there had been concern that yesterday's issue of Spanish bonds would see a lack of demand due to the poor sentiment surrounding sovereign debt in the region following the Greek crisis. However, the issue attracted more demand than expected and as a result the spread between Spanish and German bond yields narrowed - a measure that investors are happier taking more risk in the marketplace.

The only data out today in the eurozone is purchasing manager data which came in slightly better than expected. There is potential for a significant amount of movement ahead of the UK budget on Tuesday - get in touch now for a live price and to make sure you don't miss out on the best prices.

In the USA, monthly inflation data came in as expected but unemployment claims increased by 12,000. This saw some US dollar strength initially, but as investors took in data elsewhere, risk appetite returned and the US dollar weakened as funds flowed into riskier assets.

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