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

Sterling suffers as retail sales figure drop to year low

Published:  27 June, 2011

Sterling fell below $1.60 against the US dollar last week and below €1.12 against the euro as retail sales figures for the UK fell to the weakest level in a year.

Sterling fell below $1.60 against the US dollar last week and below €1.12 against the euro as retail sales figures for the UK fell to the weakest level in a year.

Currency rates - June 27

EURO/GBP - 1.1227

US$/GBP - 1.5970
CHF/GBP
- 1.3381 
CAN$/GBP
- 1.5657
AUS$/GBP
- 1.5182 
ZAR/GBP
- 10.975 
NZD/GBP
- 1.9652 
SEK/GBP
- 10.298
AED/GBP
- 5.8696
EURO/US$
- 1.4209

As expected, Bank of England policymakers voted 7-2 in favour of no change to policy and to call on further stimulus if UK growth continued to suffer - a move that attracted criticism over the weekend from the Bank of International Settlements over the weekend. The BIS warned that the UK's ultra-loose monetary policy in the face of inflation at double its target risked creating financial distortions, misallocations and instability. On a more positive note, the 'Lloyds business barometer' showed a strong rebound in June and as a result the bank now expects a correlating improvement in UK economic activity in three-four months time. 

In the euro zone, the Greek crisis continues to dominate the headlines and drive market movement. Greek PM George Papandreou survived an important vote of confidence last week, paving the way for Parliament to enact the relevant austerity measures that are required before the country receives any further funding. This vote is due on Tuesday and will be the key focus this week. 

In the USA, the US dollar continues to benefit from safe haven flows as investors look for the relative safety of US government bonds in order to reduce exposure to the European debt crisis. Demand for these bonds is so high that investors are essentially lending to the US government for free or even paying a fee to do so. Chinese Premier Wen Jiabao stated that China is ready to buy billions of European debt in order to prop up the single currency, which could in turn challenge the US dollar's status as the world's reserve currency. 

Elsewhere, the panic caused by the Greek crisis has driven demand for Japanese yen as a safe haven asset in a similar vein to the US dollar demand. It has now reached similar levels to when the Bank of Japan intervened following the recent earthquake. Expect no further strength from the yen as a result.

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.

www.SmartWineSpirits.com

Keywords: