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Sterling weakens after poor PMI results

Published:  02 August, 2012

Sterling has continued its poor week after being further undermined by the purchasing managers index for manufacturing, which showed the largest contraction since May 2009.

Smart Currency rates & comments - August 2

EURO/GBP - 1.2691
US$/GBP - 1.5548
CHF/GBP - 1.5261
CAN$/GBP - 1.5634
AUS$/GBP - 1.4839
ZAR/GBP - 12.9385
JPY/GBP - 121.98
HKD/GBP - 12.0596
NZD/GBP - 1.9224
SEK/GBP - 10.5144
AED/GBP - 5.7123
US$/EURO - 1.2245
INR/GBP - 86.71

This coupled with the worries over the UK's triple A credit rating has meant that there is very little support for sterling at the moment.

The euro awaits today's decisions and announcement from the European Central Bank following last week's rhetoric from the President of the ECB that they will do whatever it takes to save the currency. Interest rates on Spanish and Italian government debts have been falling but this may be short lived.

The US dollar has been on the main beneficiaries of the economic and debt problems in the UK and the euro zone. On Wednesday, the Federal Reserve did not announce any further measures for increasing liquidity in the US for the time being which added further support for the US dollar. The view though is that the Federal Reserve will have to pump further money into the US economy and that this could well happen in September and this would undermine the US dollar.

The commodity backed currencies especially the Australian dollar have seen significant strengthening over the last few weeks. Not necessarily on the back of good news at home but more on worries elsewhere especially in Europe.

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