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Sterling strengthens against euro due to uncertainty over Greek bailout

Published:  17 February, 2012

Sterling strengthened against the euro, this week due to the uncertainty surrounding the Greek bailout package being approved before default day on March 20.

Sterling strengthened against the euro, this week due to the uncertainty surrounding the Greek bailout package being approved before default day on March 20.


Currency rates - February 17

EURO/GBP - 1.2026

US$/GBP - 1.5810

CHF/GBP - 1.4523

CAN$/GBP - 1.5740

AUS$/GBP - 1.4679

ZAR/GBP - 12.2689

JPY/GBP - 124.99

HKD/GBP - 12.2530

NZD/GBP - 1.8895

SEK/GBP - 10.6090

AED/GBP - 5.8040

US$/EURO - 1.3138

INR/GBP - 77.69


The Confederation of British Industry was positive about the UK forecasting that the UK will avoid a recession and that the recovery will gain momentum during the year. The negative news was unemployment figures rising to 2.67million and the number of people claiming jobseeker's allowance increasing more than expected. Moreover, credit rating agency, Moody's has put the UK's AAA rating on a negative outlook suggesting that there is a one in three chance of a downgrade in the next 12-18 months. This would affect the government's ability to borrow at preferential interest rates. The Governor of the Bank of England also stated that the UK economy faced "substantial headwinds" that are "hampering our recovery and rebalancing".



The euro was under pressure this week as the market's eyes were fixated on the news surrounding the second bailout for Greece. Deadlines set throughout the week were continuously missed. A meeting scheduled for Euro-area finance chiefs on Wednesday has been postponed till Monday due to concerns that the Greek's proposed austerity package had not yet met the required conditions. Also the president to the group of Euro zone finance ministers said "further considerations are necessary". This week Moody's also cut the debt ratings of six European countries including Italy, Spain and Portugal whilst placing France and Austria on a negative outlook; however, the European Financial Stability Facility's (EFSF) kept its AAA rating.



The US$ had a steady week against sterling. The Obama administration produce its US$8 trillion budget plan which may be more political posturing rather than reality as we are in an election year. Better than expected jobless claims data were released yesterday with figures showing that the numbers of claims have fallen to a four year low supporting the raft of positive data from the US labour market in recent times. Statistics produced yesterday also showed that housing starts rose more than expected and building permits also increased; however, Producer Price Index (PPI) data came in worse than expected.



Elsewhere, the main news this week revolved around Japan's stimulus expansion adding 10 trillion yen to its asset purchase program increasing its total to 30 trillion yen (£245 billion) as its economy continues to shrink. The Bank of Japan also kept its base interest rate unchanged, target 1% inflation and kept the credit lending program at 35 trillion yen. China has pledged to inject money into the European bailout fund to support its own troubled export market. Yesterday saw much better than expected unemployment data released in Australia resulting in short term Australian dollar strength in the early hours before retracing as the markets looked toward Greece. The main data of note released later today is the Canadian Consumer Price Index (CPI) which the market hopes will produce better figures than the weak factory sales data released yesterday.



Supplied by Nick Ryder of Smart Currency Exchange, the currency partner to Harpers Wine and Spirit who have teamed up with Smart to provide readers with a free bespoke currency service. Go to for more information or call on 0207 898 0500.