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Currency update, July 16: sterling's good fortunes continue

Published:  16 July, 2010

Currency daily update for July 16 from Smart Currency Exchange: sterling continues its rally against the US dollar, hitting a two and a half month high.

Currency rates, July 16:
EURO/GBP - 1.192
US$/GBP - 1.542
CHF/GBP - 1.607
CAN$/GBP - 1.608
AUS$/GBP - 1.761
ZAR/GBP - 11.651
JPY/GBP - 134.38
HKD/GBP - 11.989
EURO/US$ - 1.293
NZD/GBP - 2.122
HUF/GBP - 334.30

Sterling continued its rally against the US dollar yesterday, hitting a two and a half month high of $1.5393 as risk appetite helped drive demand for the pound. Data in the UK was fairly thin on the ground and the movement was driven by strong data out of the USA.

In addition, key 'technical' (i.e. mathematical analysis of exchange rate graphs) levels were breached - notably $1.5310/ £1 which has been a technical resistance point versus the November 2009 high of $1.6880/ £1. Breaking this barrier opened the door (from a technical perspective) for the pound to keep going towards $1.55/£1. In terms of fundamental data, there is little out today, but investors and traders are waiting for the first estimate of second Quarter GDP for the UK - out next week. This should provide the impetus to push volatility and see the pound shoot up or drop back down.

In the Euro zone, poor sentiment towards the region eased as the Spanish government experienced better than expected demand for 15 year bonds. This saw the euro strengthen against sterling after the pound started the morning strongly above €1.20/£1. However, the pound's early gains were short lived but one analyst felt that there is potential for the pound to strengthen further against the euro over the coming year.

In the USA, with corporate earnings season well under way, JP Morgan's earnings per share came in far better than expected. In addition, unemployment claims fell by more than expected with 429,000 people claiming unemployment benefits - a drop of nearly 20,000 on last month. This positive data drove a wave of risk appetite that saw investors move from US dollars into the 'riskier' assets of the pound and euro. So far this morning, we have seen this risk appetite drive the pound over $1.54/ £1. It seems set for $1.55/ £1.

Elsewhere, the New Zealand Consumer Price Index rose 0.3% from the first Quarter to the second Quarter. That was below the expected 0.4% rise, and 1.3% rise in the previous period. New Zealand consumer inflation has been relatively poor, with prices up 1.8% year-over-year. Lower inflation means less urgency for rate hikes, which is in itself is not great news for the NZ dollar.

* 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: to get a FREE no obligation quote or to download the Smart Wine and Spirit report. Alternatively call Smart on 0207 898 0500.

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