Sterling slips over concerns of UK involvement in Irish debt

Published: 15 November, 2010

Currency Rates

EURO/GBP - 1.177
US$/GBP - 1.605
CHF/GBP - 1.576
CAN$/GBP - 1.625
AUS$/GBP - 1.632
ZAR/GBP - 11.229
JPY/GBP - 133.17
HKD/GBP - 12.451
NZD/GBP - 2.085
SEK/GBP - 11.079
US$/EURO - 1.363
HUF/GBP - 326.10

Sterling slipped against the euro on Friday as the single currency recovered ground as European leaders sought to reassure investors in 'peripheral' Euro zone debt that they would not face a debt writedown. There were also concerns over the UK's involvement in Irish debt as it became clear that UK banks have nearly $147bn worth of exposure to the country's decreasingly popular bonds. Despite this, sterling closed up nearly 2% against the euro on the week and remained above the $1.60/£1 as the week saw concerns over further Quantitative Easing in the UK fade. It is a quiet day for data in the UK with most traders likely to be looking ahead to Wednesday's minutes of the Bank of England Monetary Policy Committee two weeks ago.

In the Euro zone, the Irish government denied yesterday that the country is insolvent despite the Ministry of Finance admitting to "ongoing contacts" with international officials "in light of current market conditions". This marked a clear change in tone to recent statements which dismissed reports that the country was discussing a bailout package. There is pressure for Ireland to announce that it will seek a bailout ahead of a meeting of Eurozone members tomorrow, in which they are due to discuss the European Financial Stability Facility - the fund set up after Greece's bailout over the summer.

In the USA, the situation in Ireland saw the euro slip to a 6 week low of $1.3573/€1 as investors became concerned over the prospect of an Irish bailout. US Treasury bonds came under pressure also, as rumours circulated that the Federal Reserve would need to pull back on some of the additional Quantitative Easing and so far today, speculation that China would raise interest rates has seen investors move back into US dollars on fears of more restrictive policy in emerging markets.

Elsewhere, the Australian dollar slipped to a 2 week low against the US dollar as news that China would look to curb inflation to avoid an asset bubble - a move that could curb demand for Australian commodities, and ultimately impact the economy.

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

Printer friendly version