Friday 30th December 2011
Good morning. Welcome back to the blog after the Christmas break. Today we’ll take a quick look at where rates have moved against the Euro and US Dollar, and when markets open again on Tuesday, I’ll post a detailed update on market movements over the last week. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1938
• GBP/USD 1.5421
• GBP/AUD 1.5196
• GBP/NZD 1.9988
• GBP/CHF 1.4517
• GBP/CAD 1.5752
• GBP/ZAR 12.523
• GBP/JPY 119.63
• GBP/DKK 8.8733
• GBP/NOK 9.2823
• EUR/USD 1.2913
Pound falls to a near 3 month low vs US Dollar
Sterling has fallen to the lowest against the US Dollar in over 2 and a half months. The USD has attracted broad safe-haven flows after weak demand at an Italian bond auction highlighted risks the euro zone debt crisis will worsen next year.
Analysts expect the pound to suffer versus the dollar in 2012 as worsening European debt problems could wreak havoc on London’s financial sector, while speculation about more Bank of England quantitative easing may also sting sterling in the new year.
Pound remains supported against the Euro
Sterling is quite well supported against the weak Euro, following Italian bond auctions that saw yields of 7%, seen as unsustainable and weakening the Euro slightly Rates remain in the €1.19’s.
Concerns over the fragility of the British economy are seen extending well into 2012 with BoE policymakers leaving the door open for more quantitative easing in February.
“Whilst some further tranches of QE from the BoE are likely, the fact that the ECB are very likely to keep adding liquidity throughout the new year will keep the euro on the back foot and euro/sterling could see a test lower,” said Richard Wiltshire, chief FX broker at ETX Capital.
Have a very Happy New Year, and regular blog posts will resume every working day when the markets re-open on the 3rd of January.
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