High unemployment and growth worries hurt Sterling
Highlighting concerns about the UK, the OECD on Wednesday cut its 2011 growth forecast for the country, saying the economy faced significant risks from falling house prices, weak domestic consumption and uncertain global demand.
Also yesterday figures showed unemployment is at it's highest since 1994. The combined bad economic news for the UK weakened Sterling and pushed exchange rates lower against major currencies such as the Euro and US Dollar.
Losses against the Euro limited due to EUR weakness
Sterling didn't fall as much against the Euro as it could have done, after European Central Bank policymaker Christian Noyer cast doubt on whether euro zone rates would rise next month, saying the bank would assess the impact of events in Japan."With the euro trading at such high levels it is likely that euro/sterling will top-out around 87/88 in the next four weeks," said Carl Hammer, Chief FX Strategist at SEB. "The pair will then drift lower as the Bank of England starts tightening its monetary policy."
Risk aversion continues to help US Dollar
The pound held above the $1.60 level, but analysts saw a risk of further downside, particularly if risks to the economic outlook prompt investors to further scale back expectations for interest rates to rise in the coming months.
No data of note for the UK today. The EU has some construction data, but most economic releases today are from the US. We have further inflation data, Jobless claim and industrial production figures.
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