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Currency update, October 15 - sterling rises against dollar

Published:  15 October, 2010

Sterling rose to the highest level in eight months against the US dollar yesterday.

Sterling rose to the highest level in eight months against the US dollar yesterday. 

Currency Rates
EURO/GBP - 1.138
US$/GBP - 1.603
CHF/GBP - 1.528
CAN$/GBP - 1.609
AUS$/GBP - 1.611
ZAR/GBP - 10.918
JPY/GBP - 130.24
HKD/GBP - 12.442
NZD/GBP - 2.113
US$/EURO - 1.408
HUF/GBP - 312.45

Sterling jumped in early Asian trading to hit $1.6065/£1 as the US dollar came under heavy selling pressure after Singapore eased the trading band on the US dollar/ Singapore dollar floating exchange rate and concerns grew over further Quantitative Easing. Sterling stayed close to a 6 month low against the euro as concerns over the UK's own situation remained following downbeat comments from several Bank of England policy makers in recent days over the potential for more monetary easing. These comments were added to yesterday as deputy governor of the Bank of England Paul Tucker told the Daily Mail that the UK recovery had yet to find a "sure footing". In terms of data, there was no real data released yesterday in the UK and the calendar remains quiet today.

In the Euro zone, the euro followed suit in surging to an 8 month high against the US dollar, hitting $1.4123/€1 on the day's US dollar weakness. It was also helped by Wednesday's upbeat comments from a key European Central Bank member. Axel Weber - part of the ECB governing council - was talking about exit strategy from loose monetary policy, highlighting the widening gap between US and European monetary policy. This saw medium term interest rate expectations rise for the Euro zone.

In the USA, expectations that the Federal Reserve will add further monetary easing in the near future saw the currency plummet across the board. Poor data didn't help, with the trade deficit unexpectedly widening by $3bn and unemployment claims rising by 20,000 more on last week. Out today, there is key inflation and retail sales data - so call in for a live exchange rate as we could see the US dollar fall further.

Elsewhere, traders would be forgiven for confusing several currencies yesterday. With the US dollar performing so poorly, and a surge in demand for the Canadian dollar and Australian dollar, all three were trading in and around the $1.60/ £1 for most of the day - maybe a case for unifying to a single global dollar?

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