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Currency update, July 12: sterling slips up

Published:  12 July, 2010

Currency analysis from Smart Currency Exchange for July 12: sterling slips up

Currency rates, July 12
EURO/GBP - 1.190
US$/GBP - 1.497
CHF/GBP - 1.595
CAN$/GBP - 1.545
AUS$/GBP - 1.717
ZAR/GBP - 11.397
JPY/GBP - 133.14
HKD/GBP - 11.647
NZD/GBP - 2.115
HUF/GBP - 333.04

Sterling slipped against the USD dollar and euro on Friday as the post-election and budget rally seems to be coming to an end. After hitting $1.5141/ £1 on Thursday - the highest level since May - the pound is now trading at $1.4970/ £1.

Data showed that factory gate inflation slowed more than expected, suggesting that the recent rise in prices may indeed be temporary as the Bank of England had predicted. Since the election and the emergency budget, the pound has performed well as investors feel that there is a clear plan in place to clear the deficit.

However, it now seems clear that this will come at the cost of slow growth and as such sterling has begun to retrace gains seen recently. Out today, the focus is on final GDP figures for the 1st quarter, which is expected to remain at 0.3%.

Out next week, there is the first estimate for second quarter GDP which is estimated at 0.7% by many. Get in touch now to ensure you buy at the right price.

In the euro zone, there are likely to be some sore heads and very little economic activity in Spain today following last night's football success. The euro fell 0.3% in overnight trade against the US dollar as the single currency gave back gains made last week.

The euro has strengthened against the pound and is currently trading around the €1.19/ £1 level. Confidence in the euro zone seems to be creeping back in after ECB Bank President Jean-Claude Trichet pledged to take the necessary steps to deliver price stability.

However, there is still a high possibility that the euro will lose ground again versus the pound. European finance ministers meet today in Brussels.

In the US, today marks the start of US 'earnings season' - when US companies release financial earnings data to the financial markets. With US data taking a notable turn for the worse over the last few months, many companies could trim their profit expectations.

With the world taking the lead from the US economy, the next few weeks could see some interesting swings in sentiment and volatility on the currency markets. Federal Reserve chairman Ben Bernanke speaks later today.

Elsewhere, Australian home loans to owner-occupiers rose 1.9% in May - the first increase since September 2009. The value of loans declined a bit, but overall the data was positive - especially following last week's better than expected jobs report. The Australian dollar is strengthening.

* 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.

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