Pound falls vs Euro and to 8 month low vs USD

Tuesday 13th September 2011
Good morning. Sterling fell to a near 8 month low against the US Dollar yesterday, as worries about the euro zone debt crisis spreading boosted demand for the USD. The Pound also fell slightly against the Euro, but remains just above €1.16. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1611
• GBP/USD 1.5819
• GBP/AUD 1.5306
• GBP/NZD 1.9222
• GBP/CHF 1.3983
• GBP/CAD 1.5717
• GBP/ZAR 11.679
• GBP/JPY 121.69
• GBP/DKK 8.6458
• GBP/NOK 8.9840
• EUR/USD 1.3621

Sterling falls against Euro and to 8 month low vs US Dollar

Worries about the Eurozone debt crisis spreading has meant investors moving funds to the safe haven US Dollar. This has strengthened the greenback, pushing GBP/USD rates down to near the lowest in 8 months.

Sterling also fell slightly vs the Euro, after last weeks surge against the single currency. It’s due to worries the UK economy is facing contraction, and this is keeping the Pound in check. Also keeping the pound under pressure versus the dollar and other currencies was the prospect that the Bank of England may consider the possibility of injecting more stimulus to the economy as it struggles to recover.

The pound is likely to fall if investors continue to speculate that the BoE may be moving closer to buying more UK assets from the market. The central bank kept policy unchanged last week. Most market players do expect further QE however, and this is likely to limit any gains for the Pound.

Today’s Data

UK data today comprises Retail Price Index, Trade Balance figures, and the Consumer Price Index. All of these are significant releases, and any negative numbers could easily reverse the significant GBP/EUR gains we saw last week.

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