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Currency update, August 24: sterling's recovery cut short

Published:  24 August, 2010

Currency update for August 24 from Smart Currency Exchange: sterling's high yesterday proves to be short lived.

Currency rates, August 24:
EURO/GBP - 1.219
US$/GBP - 1.538
CHF/GBP - 1.604
CAN$/GBP - 1.627
AUS$/GBP - 1.736
ZAR/GBP - 11.399
JPY/GBP - 130.38
HKD/GBP - 11.960
NZD/GBP - 2.189
EURO/US$ - 1.261
HUF/GBP - 346.69

Sterling hit a two month high against the euro yesterday reaching €1.2279/£1. This was short lived and this morning we have seen sterling lose ground against both the euro and the US$. Trading volumes in August are traditionally low which means that we can see rapid movements even when there is a lack of supporting data.

In the Euro zone, sentiment in the region has deteriorated following comments from Axel Weber, German Bundesbank president and a member of the ECB's governing council last week. He is pushing the ECB to extend its ultra loose monetary policy for as long as possible amid concerns that the difficulties caused by the sovereign debt crisis are not over. This seems sensible to me as the risk factors are still extreme. Second quarter growth in Germany was confirmed at 2.2% this morning as exports and investment fuelled Germany's record breaking economic growth.

The US dollar is performing well against the euro and sterling this week on the back of renewed risk aversion. Today sees the release of US existing home sales which is expected to have fallen to 13.2% in July.

The Australian dollar has suffered at the start of this week as their election failed to produce a clear winner. The prospect of a hung parliament caused the Australian dollar to fall. This morning we have seen a slight pull back but the next few days are expected to be volatile as economic compromises will be made by both parties.

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

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