Sterling falls against dollar due to contracted UK industrial output

Published: 13 June, 2011

Sterling fell to a two week low against the US dollar on Friday as figures reveal UK industrial output contracted by 1.7% in April as a result of the extra bank holiday.

Currency rates - June 13

EURO/GBP - 1.1334
US$/GBP - 1.6274
CHF/GBP - 1.3711
CAN$/GBP - 1.5896
AUS$/GBP - 1.5404
ZAR/GBP - 11.017
JPY/GBP - 130.79
HKD/GBP - 12.666
NZD/GBP - 1.9988
SEK/GBP - 10.333
US$/EURO - 1.4359

However, with concerns over the Greek debt crisis looming yet again, sterling strengthened against the euro and is trading above €1.13/ £1 this morning. UK interest rates are still expected to remain on hold until at least the beginning of next year. It is a relatively quiet day today, but it will be interesting to hear the thoughts of Bank of England policymaker Martin Weale later today, who has been advocating a 0.25% hike for some time. Data for the rest of the week includes UK inflation data out tomorrow, unemployment figures on Wednesday and retail sales figures on Friday.

In the euro zone, the euro strengthened briefly against the US dollar this morning after some "short-covering" - i.e. traders buying back euros to protect against bets that the currency will move down. However, the trend is very much downwards for the single currency as European policymakers are still no closer to agreeing a framework for a financial aid package to Greece. Despite signalling an interest rate hike next month, the ECB kept inflation forecasts on hold which saw investors cut interest rate expectations past July.

In the USA, markets have started to follow a risk averse pattern of trading in the last few days. The euro zone debt crisis, and concerns over global growth have seen investors moving funds into US government bonds just two weeks ahead of the end of the US Federal Reserve's second round of asset purchase funding. There have been no hints as to whether a third round of funding will follow, and with poor recent data, investors are expecting the worst.

Elsewhere, another earthquake in New Zealand overnight has seen sterling jump against the NZ dollar by over 1%. The quake-prone city of Christchurch is set to experience further aftershocks over the coming days. Damage caused is set to see interest rates stay on hold for longer as the second earthquake hampers efforts to rebuild following September's earthquake.

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