Sterling ends week positively

Published: 19 August, 2011

Sterling had a positive end to the week, breaking above €1.15/£1 against the euro and nearly hitting $1.66/£1 against the US dollar earlier in the week.

Currency rates - August 19

EURO/GBP - 1.1522
US$/GBP - 1.6507
CHF/GBP - 1.3045
CAN$/GBP - 1.6332
AUS$/GBP - 1.5912
ZAR/GBP - 11.8802
JPY/GBP - 126.324
HKD/GBP - 12.8791
NZD/GBP - 2.0041
SEK/GBP - 10.6168
AED/GBP - 6.064
US$/EURO - 1.4320

Retail sales out today for July increased by a slim 0.2% showing consumers and retailers are still in difficult circumstances which caused sterling to fall slightly. Yet it still remained within sight of Wednesday's three-and-a-half month high of $1.6590/£1 against the US dollar. Sterling held up against the euro as well as European shares showed signs of weakening. With interest rates placed on hold, there is now speculation that quantitative easing could be back on the table.

In the euro zone, it has been a poor week for the single currency with European GDP figures disappointing earlier in the week. Germany also posted woeful growth figures as the region showed growth of only 0.2% - a drop from last month's 0.8%. Investment bank Morgan Stanley cut its euro zone growth forecast, and is fearful of an extended period of low inflation and poor growth. This week also saw a rather lacklustre response to a meeting between French and German leaders after they announced new measures to combat the sovereign crisis.

In the USA, there was mixed economic data yesterday with jobless claims rising to 408,000 - the highest this month. On the other hand, consumer price inflation came in higher than expected with a 0.5% increase for June. This meant core CPI rose 1.8% year on year. The US dollar did show signs of strength alongside the Swiss franc and the yen as investors looked to safer haven assets on the back of a poor week in Europe.

Elsewhere, the Canadian dollar also fell for most of the week against the US Dollar as concerns abound over the global economy's slow recovery. Furthermore, Canada's rate of inflation is predicted to show a slow down. The South African rand slipped by 1.5% on Thursday against sterling, hitting the lowest level for several months.

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