Currency Rates

EURO/GBP - 1.146
US$/GBP - 1.622
CHF/GBP - 1.685
CAN$/GBP - 1.699
AUS$/GBP - 1.788


Comments: After a volatile few days on the currency markets, yesterday was much quieter as traders digested the stream of positive data that caused sterling to jump over the last few days. Sterling did slide slightly against euro, but that was due to profit taking by investors more than negative data. Looking ahead to today, monthly retail sales figures are released for December which are expected to show a modest increase. Whilst this can be attributed somewhat to consumers purchasing more expensive items before the rise in VAT took effect, it still should have a positive impact ahead of the first estimate of the UK’s growth for the 4th quarter of 2009 – figures that are released on Tuesday. However if it comes in less than expected, it is likely to put an end to the current rally for now.

In the Euro zone, the Greek finance minister George Provopoulos has stated that Greece will not be leaving the single currency despite the “extremely serious” issues facing the economy over the country’s budget deficit. The problem with Greece is still there and so far there has been a lot of rhetoric and little decisive action, and as a result this is likely to continue to put downward pressure on the euro as investors look for more attractive options. There is little meaningful data out from the region today.

In the US, the US dollar strengthened slightly against sterling after a decrease in investor risk appetite following a move by China and now the US Government to regulate and restrict the money markets. This is a concern because it comes at a time when most Governments worldwide are looking at pulling back the emergency funding and additional over-regulation or restriction could snub out recovery growth and discourage investment. This will be a major issue over the next year and we will have to wait and see how it pans out.

Elsewhere, despite Chinese central bank chief Zhou Xiachuan stating that the bank would not attempt to cool the pace of Chinese growth, the commodity currencies suffered over concerns that Chinese regulation would curb demand for commodities going forward.

Note: All rates are mid market inter bank and indicative at the point of publication.