7th June 2011
Good morning. Sterling fell again vs the Euro yesterday, hitting a new 1 month low. It was due to the IMF giving a muted reaction to UK growth, stating further Quantitative Easing may be required. At 08:30am this morning rates are as follows:
- GBP/EUR 1.1202
- GBP/USD 1.6400
- GBP/AUD 1.5330
- GBP/NZD 2.0014
- GBP/CAD 1.6013
- GBP/ZAR 11.058
- GBP/JPY 131.58
- GBP/CHF 1.3676
- GBP/NOK 8.7774
- GBP/DKK 8.3526
- EUR/USD 1.4634
IMF annual assessment weakens Sterling
The IMF’s annual economic assessment said the UK economic recovery was broadly on track but more quantitative easing may be required if growth continues to be weak.
The news weakened Sterling and pushed exchange rates lower. This combined with expectations the European Central Bank will flag an interest rate hike at its meeting on Thursday, helped the euro shrug off lingering worries over Greek debt and caused Strength in the single currency.
The combined effect was the GBP/EUR rate dropping into the €1.11’s which is now the lowest in over a month, and not far from a 1 year low.
This week both the UK and EU announce interest rate changes. It’s expected both zones will leave rates on hold, however it’s expected the EU will raise rates at least twice this year, while the UK is not expected to raise rates until 2012. This is the reason that GBP/EUR rates are low.
There is no data of note from the EU or UK today. Australia had an interest rate decision where rates were left on hold, and there are some inflation figures from Switzerland. Other than that, measures of economic optimism are released from the USA.
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