Subscriber login Close [x]
remember me
You are not logged in.

Currency update, July 7: sterling's bounce against the dollar

Published:  07 July, 2010

Today's currency analysis from Smart Currency Exchange: sterling's bounce against the dollar

Today's currency analysis from Smart Currency Exchange:
Currency rates, July 7
EURO/GBP - 1.200
US$/GBP - 1.508
CHF/GBP - 1.603
CAN$/GBP - 1.599
AUS$/GBP - 1.783
ZAR/GBP - 11.598
JPY/GBP - 131.36
HKD/GBP - 11.757
NZD/GBP - 2.189
HUF/GBP - 342.60

Sterling rose overall against the US dollar but fell against the euro as investors bought riskier investment assets as concerns eased over the global recession. Sterling jumped above $1.52/£1 in early trading as data in the USA came in worse than expected.

This left sterling within spitting distance of Friday's nine week high of $1.5230 and prompted some analysts to suggest that there is scope for the pound to strengthen towards $1.55/ £1 if the conditions allow it, however this is likely to take some time.

The pound fell to €1.1990/ £1 as improved sentiment towards the euro saw investors moving funds into riskier investments in the region. This morning however, data showing a decline in jobs growth has seen the pound lose ground again and in addition, the UK Shop price index has shown a decline in the growth of retail inflation for June.

Out later today there is Halifax house price survey data which has been rescheduled to be released today. This data can cause volatility - especially as housing data has disappointed recently.

In the Euro zone, there was little data out in the region yesterday, and the euro traded on improved sentiment following better than expected data last week. The single currency gained against both the pound and the US dollar hitting $1.2630/ €1 and strengthening below the €1.20/ £1 for the first time in several days.

The euro's strength has come as investors moved to close short positions that were in place ahead of last week's Spanish bond issues and €442bn loan facility, as these were expected to cause the euro to perform badly.

However, those events passed by without any issues, and investors have needed to buy back euros to avoid losing money - causing strength. Out today, there is final GDP data for the region, which is expected to remain unchanged at 0.2%. In addition, there is German factory order data for the month which is expected to show a decline on last month.

In the USA, yesterday saw the US dollar decline as global risk appetite improved after concerns over the recovery eased. US stock markets were up 2.8% by late afternoon which prompted investors to move funds to 'higher risk' currencies - including the euro, pound and 'commodity' currencies such as the AUS dollar.

However, since opening this morning, the US dollar has recovered ground as stock markets fell overnight following poor US service sector growth. Out later today there is very little data so expect the US dollar to trade on sentiment.

Elsewhere, data showed that activity in the Australian construction sector fell for the first time in six months, after a sharp drop in private construction. This is likely to be as a result of the aggressive interest rate hikes that have seen 1.5% of interest rate hikes added to borrowing costs between September 2009 and May of this year.

* Smart Currency Exchange is a currency partner to Harpers Wine and Spirit. Harpers Wine and Spirit has teamed up with Smart to provide readers with a free bespoke currency service.

If you are making or receiving international payments and are interested in talking to Smart please go to: to get a FREE no obligation quote or to download the Smart Wine and Spirit report. Alternatively call Smart on 0207 898 0500.