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Pound hits 5-month high vs. Dollar

Published:  30 July, 2010

The pound continued its strong run against the dollar, hitting a five month high but narrowly failed to break the €1.20/ £1 barrier.

EURO/GBP - 1.198
US$/GBP - 1.562
CHF/GBP - 1.621
CAN$/GBP - 1.613
AUS$/GBP - 1.736
ZAR/GBP - 11.477
JPY/GBP - 134.80
HKD/GBP - 12.133
NZD/GBP - 2.166
EURO/US$ - 1.303
HUF/GBP - 340.69

Sterling hit a further 5 month high of $1.5660/£1 yesterday on speculation over month end 'rebalancing' after strong performances on the US stock market. Strong earnings from many US firms over the last week has left many analysts expecting investors to sell their US dollar share holdings, putting pressure on the US dollar. Sterling also broke through a key technical barrier on the graph this week, breaking through the 200 day 'moving average', which is a strong positive signal for sterling. In terms of data, house prices and lending data in the UK disappointed, which serves as a reminder that the UK is not quite out of the woods yet. There is little or no data out today for the UK - call in now for a live exchange rate.

In the Euro zone, German unemployment data came in better than expected, as the level of unemployment dropped by 20,000 - 2,000 more than expected. The euro maintained its relative strength against the pound, keeping sterling from breaking above the €1.20/ £1 barrier. In terms of data, there is German retail sales data and European inflation data alongside Italian unemployment figures. The Euro has had a relatively good week, but many are confused as to why the euro has performed so well, given the issues with sovereign debt in the region. Call in now for a live exchange rate.

In the USA, unemployment claims came in as expected with 457,000 people claiming unemployment benefits last month. With weak US data and relatively strong UK data, some analysts have been predicting prices above $1.57/£1 as the next realistic level. However, this is not expected to last long, as the effects of the long awaited 'fiscal squeeze' have yet to be seen and this is likely to impact on the price of the pound moving forward. Out later today, US GDP is the key piece of data and it is expected to show that the pace of the US recovery is slowing. Call in now for a live price to ensure you don't miss out.

Elsewhere, Australian private credit figures came in worse than expected. This is a natural progression after an aggressive period of interest rate hikes. Analysts point out that an interest rate rise can take 6 months to feed into the economy, and this is clearly the case. Many are expecting that the Australian central bank will shy away from further rate rises for the rest of the year. Get in touch now to ensure you don't miss out.

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