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Sterling gains ground after Osborne dismisses spending cut review

Published:  12 August, 2011

Sterling recovered ground yesterday against the US dollar after Chancellor of the Exchequer, George Osborne rebuffed opposition demands to review spending cuts.

Sterling recovered ground yesterday against the US dollar after Chancellor of the Exchequer, George Osborne rebuffed opposition demands to review spending cuts.

Currency rates - August 12


EURO/GBP -
1.1406 
US$/GBP -
1.6211
CHF/GBP -
1.2294
CAN$/GBP -
1.6022
AUS$/GBP -
1.5771
ZAR/GBP -
11.7802
JPY/GBP -
124.49
HKD/GBP -
12.6391
NZD/GBP -
1.9737
SEK/GBP -
10.5711
AED/GBP -
5.957
US$/EURO -
1.4212

 

It comes in a turbulent week that has seen wide swings up and down on the stock markets and the Bank of England cut the UK's growth forecast. Widespread rioting and looting had some impact earlier in the week, seeing sterling slip as investors questioned the UK's new found safe haven status in the face of widespread destruction. However, this was soon brought under control and sterling regained ground.

In the euro zone, the euro gained against the Swiss franc on Thursday, surging 6%, boosted by talk that the Swiss currency could be pegged against the euro. This week has seen the ECB taking action to stabilise bond markets by purchasing Italian and Spanish bonds - this seems to have calmed bond markets to an extent. In France, there has been speculation over whether it might suffer a credit rating downgrade given its exposure to Greek debt. In addition, four countries in the euro zone announced a ban on short selling in the stock markets in an attempt to calm the huge volatility.

In the USA, stocks rose again on Thursday following the worst plunge since the bull market began in 2009, as an unexpected drop in jobless claims slowed concern that the world's biggest economy is slowing. US jobs claims for unemployment benefits fell by 7,000 to the lowest level since early April. The US dollar and euro both gained against the Swiss franc as the Swiss central bank said it could ease monetary policy further.

Elsewhere, the commodity currencies have come under a little pressure in the last week as investors pull out of riskier investments given the market turmoil. One major beneficiary has been sterling, which surged to the highest level against the South African rand since late February this week. Australian unemployment jumped to 5.1% in July from 4.9% a month earlier. Thursday saw the New Zealand dollar after prices of commodities gained.



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