EURO/GBP – 1.1853
US$/GBP – 1.6064
CHF/GBP – 1.5608
CAN$/GBP – 1.6017
AUS$/GBP – 1.6092
ZAR/GBP – 11.7025
JPY/GBP – 134.103
HKD/GBP – 12.5205
NZD/GBP – 2.1203
SEK/GBP – 10.4537
US$/EURO – 1.3548
The Bank of England kept interest rates on hold yesterday at 0.5% and kept the Quantitative Easing programme on hold at £200bn. This initially saw sterling drop against the US dollar, but later recover on the expectation that the Bank would look to hike interest rates as early as May to deal with stubbornly high inflation. Higher interest rates mean that global investors will achieve a higher return on sterling based investments and as such, sees strength from the currency. The markets will keep a close eye on next week’s inflation report for any clue as to timings of a future rate hike.
In the euro zone, yesterday saw some positive data in the form of French industrial production which beat expectations. However, the lack of concrete policy with regard to a long term debt reduction plan saw the euro slip against the US dollar by close to 1% on the day. Also, peripheral debt yields crept up as investors felt less averse to buying into the assets of ‘risky’ economies. It is a relatively quiet day for data, but ensure you are protected ahead of next week by speaking to one of the team.
In the USA, the US dollar had a strong day yesterday, benefiting from concerns over the euro zone debt crisis but also strengthening off the back of strong US data. Figures released yesterday showed that new claims for unemployment benefits dropped to a 2 ½ year low which helped underscore a belief that the US economy was on the mend. Call in now for a live exchange rate as there is still the chance of significant volatility.
Elsewhere, the Australian dollar slipped against most currencies yesterday as the Reserve Bank of Australia said that they would keep interest rates on hold for some time. The impact of the recent floods, and China’s efforts to cool runaway inflation and growth have left the outlook for Australia (and its exports) slightly cloudy. It may be a good time to look at buying Australian dollars to take advantage of sterling strength.
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