Sterling recovered from lows against the US Dollar and Euro yesterday, caught up in the end of year flows and holiday-thinned trading volumes. Rates @08:30am are as follows:
- GBP/EUR 1.1194
- GBP/USD 1.6132
- GBP/AUD 1.7931
- GBP/NZD 2.2194
- GBP/CAD 1.6908
- GBP/CHF 1.6633
- GBP/JPY 148.87
- GBP/ZAR 11.863
- EUR/USD 1.4406
Sterling is still weighed down by gloom over the economy and rising public debt. However, traders said late month end flows towards the end of the session helped spark a solid recovery in euro/sterling, with extremely thin volumes helping to exaggerate price movements.
This year has been challenging for the UK currency. Although sterling has appreciated by around 6 percent against the euro in 2009, this was from a record low point late in 2008 – almost exactly a year ago, when GBP/EUR rates almost reached parity. We saw a recovery to nearly €1.20, however when the Bank of England decided to create £200bn pounds in Quantitiative Easing to try and boost the economy, rates tumbled again.
Where all other major economies have exited recession this year, the UK is still lagging behind. Concerns over the level of our public debt and levels of spending mean the UK is at risk of having our credit rating downgraded, like Greece and Spain recently did.
For these reasons, going into 2010 the pound will continue to face pressure. I don’t think we’ll see a decent recovery for Sterling until the General election, be that in March or May. All the while, other economies are racing ahead, and their currencies will strengthen before ours.
All in all, 2009 was a challenging year for Sterling, however 2010 may be more so.
Daily reports will continue here as usual on Monday 4th January. Until then, I hope everyone has good New Year Celebrations, and wishing all regular readers a prosperous 2010. We can help you get the best rates possible for all your currency needs during the next year. Our rates are up to 6% better than the banks offer, and trading with us is a simply process.
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