Sterling falls as euro zone rescue fund secured

Published: 30 September, 2011

The pound fell by 0.4% against the euro after German parliament voted in favour of approving another euro zone rescue fund.

Currency rates - September 30

EURO/GBP - 1.1504
US$/GBP - 1.5546
CHF/GBP - 1.4038
CAN$/GBP - 1.6202
AUS$/GBP - 1.5982
ZAR/GBP - 12.4075
JPY/GBP - 119.21
HKD/GBP - 12.1138
NZD/GBP - 2.0332
SEK/GBP - 10.6732
AED/GBP - 5.71
US$/EURO - 1.3492

However, it climbed by 0.7% against the US dollar due to rumours the Swiss National Bank may raise its amount of sterling holdings increases. This week has shown significant signs that sterling is in fact being led around by other currency pairs which makes its movement difficult to predict. Data out yesterday showed UK house prices rose by 0.1% and according to Nationwide, are likely to remain stable until the end of the year.

The euro rose by 0.6% versus the US dollar after German policy makers approved an expansion of the euro zone bailout package which was passed with 523 votes in favour and 85 against. Germany will now put up €211 billion instead of €123 billion. We may see the euro strengthen further as many feel the correct measures to solve the crisis are finally being taken. Data yesterday showed Germany's unemployment rate decreased and is at its lowest level in two decades.

In the US, the US dollar rose by 0.5% against the yen whilst it made slim losses versus the euro. There was some good news for the US yesterday with GDP figures showing the economy has grown 1.3% for the second quarter. Additionally, jobless claims decreased from last week. Despite this, the US dollar still slipped 0.2% against a basket of currencies. Many think that the appeal for the US dollar as a safe haven currency is being undermined by the possibility of further quantitative easing from the Federal Reserve next week.

Elsewhere, the Canadian dollar weakened against the US dollar yesterday as the prices of commodities sold by Canada rose 0.5% from last month. Canada's annual inflation rate reached 3.1% for August.

Smart Currency Exchange is a currency partner to Harpers Wine and Spirit. Harpers Wine and Spirit has teamed up with Smart to provide readers with a free bespoke currency service. www.SmartWineSpirits.com

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