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Currency update, July 28: good day for sterling

Published:  28 July, 2010

Currency analysis for July 28 by Smart Currency Exchange: another good day for sterling.
For bespoke currency advice go to

Currency analysis for July 28 by Smart Currency Exchange: another good day for sterling. 
For bespoke currency advice go to

Currency rates, July 28
EURO/GBP - 1.197
US$/GBP - 1.558
CHF/GBP - 1.652
CAN$/GBP - 1.608
AUS$/GBP - 1.742
ZAR/GBP - 11.425
JPY/GBP - 137.12
HKD/GBP - 12.104
NZD/GBP - 2.133
EURO/US$ - 1.300
HUF/GBP - 338.85

Sterling continued to strengthen to a five month high against the US dollar after better than expected retail sales data boosted the pound further off the back of last week's strong GDP data.

Sterling hit a high of $1.5570/£1 as better than expected bank earnings data saw investors look to riskier investments away from 'safe haven' US dollar holdings. UBS beat profit forecasts and Deutsche bank delivered stronger than expected results after a fall in losses from loans.

However, the same appetite for risk that saw the pound strengthen so much against the US dollar kept the pound below €1.20/£1 as the euro is the more 'riskier' investment option when compared to sterling.

Later today, the Monetary Policy Committee appears before the Treasury Select Committee to present on monetary policy and growth expectations. Some analysts are fearful that given the recent minutes of the Bank's last meeting, the rhetoric is likely to be negative which could impact sterling.

In the Euro zone, the euro continues to enjoy relatively strong support despite the heavy criticism that the bank stress tests have attracted in recent days. One analyst went so far as to express complete bemusement at the support the euro was seeing, after the methodology behind Friday's test results has widely been shown to be flawed, and as such, the result that showed only seven banks need further capital is a huge underestimation of the true situation.

Regardless, the euro briefly pushed past €1.30/$1 for the first time since early May.
Out later today there is German inflation data.

In the USA, consumer confidence fell by more then expected posting a figure of 50.4 against an expectation of 51 in polls. With fiscal and monetary stimulus fading, concerns over the labour market and market concerns over European sovereign debt, the US recovery is seemingly faltering and as a result it is no surprise that confidence fell. This saw investors look to the pound and the US dollar fell off considerably yesterday.

Out later today there is data on durable goods orders which gives a good idea of business optimism.

Elsewhere, the Australian dollar dropped after inflation data came short of what was expected. Prices rose by 0.6% putting the annual inflation rate at 3.1% to the end of June. Economists had been expecting at least a 3.4% increase, and as such this saw interest rate expectations fall and the Australian dollar weaken.

* 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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