Good Morning. Sterling fell yet again against the Euro and US Dollar yesterday, on weak UK data and concerns the Bank of England could expand quantitative easing.
Sterling was hit in tandem with other perceived riskier currencies as worries about Greece's high debt levels and weak U.S. jobless claims data encouraged investors to cut risk exposure, prompting flows into the dollar and the yen. Rates @ 08:30am are as follows:
- GBP/EUR 1.1252
- GBP/USD 1.5269
- GBP/AUD 1.7165
- GBP/NZD 2.1997
- GBP/CAD 1.6159
- GBP/CHF 1.6461
- GBP/ZAR 11.849
- GBP/JPY 136.30
- EUR/USD 1.3564
There are worries that GDP growth of 0.1% seen in the final three months of 2009 may be revised downwards today. If it proves to have been a negative figure, that would show the UK had failed to emerge from recession.
Last week, figures showed that UK inflation had accelerated to 3.5% and that public finances had deteriorated further after the government borrowed another £4.3bn in January to plug the growing hole in the UK's finances.
"The moves in sterling have gone further than most other currencies because of the poor UK data, raising concerns that weaknesses in the economy remain," said Lauren Rosborough, currency strategist at Westpac.
Bank of England governor Mervyn King this week told MPs that he believed there was no danger of a downgrade on the UK currency's AAA status. However Rabobank International currency strategist Jeremy Sketch said that many investors were not convinced about the security of its rating.
"Sterling is being seen in the risk bucket and risk is off the agenda right now," Mr Sketch told Bloomberg.
So, it's probably a day of reckoning for the pound, and it would be a brave person that bets on the pound rising. For those that don't wish to take that gamble, contact us this morning to discuss fixing rates before the decision this morning.
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