Sterling slips as investors uncertain over UK outlook

Published: 06 October, 2011

Sterling slipped against the euro and US dollar yesterday after a mixed day of data left investors uncertain over the UK's economic outlook ahead of this month's Bank of England meeting later this morning.

Currency Rates
EURO/GBP - 1.1552
US$/GBP - 1.5417
CHF/GBP - 1.4251
CAN$/GBP - 1.6047
AUS$/GBP - 1.5930
ZAR/GBP - 12.2889
JPY/GBP - 118.34
HKD/GBP - 12.0055
NZD/GBP - 2.0104
SEK/GBP - 10.5745
US$/EURO - 1.3341

Early yesterday morning, final UK growth figures for the second quarter of 2011 were revised downwards to show a final figure of 0.1% growth. This significantly dampened prospects that the Bank would hold off on implementing a second round of quantitative easing. Despite this weak data, PMI sector activity data for the services industry beat expectations and showed growth. Sentiment towards sterling has taken a knock over previous weeks so call in now to ensure you don't lose out to adverse currency exchange rates.

In the euro zone, European shares rebounded in early trading as news circulated of a pledge by European finance ministers to recapitalise the banking sector. This saw the single currency steady on the hope that this would help ease some of the concerns, after France and Belgium were forced to recapitalise Dexia bank - the first casualty of the sovereign crisis. Yesterday morning also saw investors awaking to the news that Italy had suffered a downgrade on concerns over next year's funding situation.

In the USA, mixed data kept the US dollar flat against the euro as figures showed a drop in the level of service orders, but showed an improvement in the ADP non-farm payroll data ahead of the 'mainstream' figures that are released on Friday. Markets felt better after Fed Chairman Ben Bernanke pledged to step in to aid the US economy if necessary.

Elsewhere, the euro hit the highest level against the Swiss franc for two weeks yesterday breaking above 1.23 as investors moved away from the safe haven currency on news over the potential recapitalisation of European banks.

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