Subscriber login Close [x]
remember me
You are not logged in.

Sterling slips, ahead of spending review

Published:  20 October, 2010

Sterling slipped across the board yesterday as weak UK factory orders caused concerns amongst investors ahead of today's government spending review.

Currency Rates
EURO/GBP - 1.140
US$/GBP - 1.571
CHF/GBP - 1.522
CAN$/GBP - 1.621
AUS$/GBP - 1.611
ZAR/GBP - 10.943
JPY/GBP - 127.76
HKD/GBP - 12.202
NZD/GBP - 2.105
HUF/GBP - 316.25

Figures from the Confederation of British industry dropped even further than in September which raises doubts over the robustness of the manufacturing sector. With investors very sensitive to any perceived problems with the UK recovery ahead of Wednesday's "perfect storm" of data - with the Government's spending review and the Bank of England's minutes released - sterling suffered. The Bank minutes are expected to show a 3 way split on monetary policy, so ensure you speak to one of the team ASAP to ensure you are not missing out once the dust has settled from today's announcements.

In the Eurozone, German economic sentiment came in worse than expected at -7.2 against an expectation of -7, but sentiment for the region as a whole beat analyst expectations. In addition, the EU current account unexpectedly showed an additional €3bn deficit - rising from €4.4bn to €7.5bn in the last month. Out tomorrow, there is German inflation data. With the euro taking its lead from other currencies, this data is unlikely to have a great effect so call in to prevent the cost of your payment increasing.

In the USA, a surprise interest rate hike by China yesterday saw investors move into the safer haven asset of the US dollar as this was seen as a sign that the global recovery was flagging. The US dollar has come under significant pressure since September, as expectations of further monetary easing by the Federal Reserve has seen heavy selling of the currency. Many analysts believe that such a move by the Fed has already been 'priced in' i.e. the price is as if the Fed had already added further funding to the economy. As a result, we are likely to see sterling slip back from the $1.61/£1 it hit on Friday.

Elsewhere, as a result of the interest rate hikes in China, the Australian dollar took a hammering yesterday. With the Australian economy driven by booming demand from China over the last few years, any moves to dampen growth in the economy impacts heavily on expectations of demand for Australian exports. As a result, sterling gained over 0.8% against the currency. Speak to one of the Smart traders about using market orders to take advantage of any volatility.

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.