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Sterling hits euro high, but UK economic picture deteriorates

Published:  08 December, 2011

Sterling hit a one month high against the euro yesterday of €1.1748/£1, coming close to the highest level since March.

Sterling hit a one month high against the euro yesterday of €1.1748/£1, coming close to the highest level since March.

Currency rates - December 8

EURO/GBP - 1.1701

US$/GBP - 1.5698

CHF/GBP - 1.4493

CAN$/GBP - 1.5849
- 1.5270
- 12.6355
- 121.81
- 12.2093

NZD/GBP - 2.0096

SEK/GBP - 10.5531

AED/GBP - 5.768

US$/EURO - 1.3412

The rise came after a German official played down market expectations of a comprehensive solution to the euro crisis being announced on Friday. Weak industrial data for the UK was largely ignored as the focus intensifies on the outcome of Friday's summit. Industrial output slipped at the fastest pace in six months in October, raising further concerns over the UK recovery as the economic picture deteriorates further.

The euro fell after a German official said that Berlin was becoming pessimistic over the likelihood of a comprehensive solution being announced on Friday, as many governments failed to grasp the gravity of the situation. A key focus of the summit is the level of progress towards fiscal integration whilst minimising the moral hazard of any political changes. The European Central Bank is widely expected to cut interest rates today.

In the USA, the US dollar yet again took a back seat to the European debt crisis and the build up to Friday's EU summit and today's (expected) interest rate cut. Barclays Capital yesterday amended their US dollar/ sterling forecasts to reflect a general movement from euros towards the US dollar over the coming months, meaning that sterling is now expected to drop steadily towards $1.50/£1 over the next 12 months.

Elsewhere, the Australian dollar strengthened yesterday after GDP growth figures came in at 2.5% - beating expectations by nearly 1%. Australian growth has been strong, yet the Reserve Bank of Australia has begun to cut interest rates to cope with potential slowing demand from China.

Supplied by Nick Ryder of Smart Currency Exchange, the currency partner to Harpers Wine and Spirit who have teamed up with Smart to provide readers with a free bespoke currency service
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