Sterling holds on to last week's gains

Published: 19 December, 2011

Sterling is holding on to gains against the euro as the euro zone debt crisis cast a shadow over the single currency.

Currency rates - December 19

EURO/GBP - 1.1910

US$/GBP - 1.5526

CHF/GBP - 1.4536

CAN$/GBP - 1.6092
AUS$/GBP - 1.5594
ZAR/GBP - 12.9528
JPY/GBP - 120.85
HKD/GBP - 12.0769

NZD/GBP - 2.0390

SEK/GBP - 10.7435

AED/GBP - 5.698

US$/EURO - 1.3020

Last week saw sterling break above €1.19/£1 for the first time in nine months as credit rating agency Standard & Poor's put 15 of the 17 euro members on notice of a credit rating downgrade. The outlook for the UK economy remains fragile despite upward revisions to retail sales figures.

In the euro zone, last week saw Belgium's credit rating downgraded and France's rating outlook downgraded to negative. Ongoing concerns over sovereign rating downgrades will keep the euro under pressure heading into the festive period. The main activity today that markets will be looking closely at is a conference call this afternoon between European finance ministers to discuss ways to boost IMF resources.

In the USA, the US dollar strengthened overnight on safe haven demand as the news emerged of North Korean leader Kim Jong-il's death. Political uncertainty saw investors buying US dollars to avoid riskier investments. Over the weekend, the Senate approved a $1trn bill to fund government spending and extended the payroll tax cut, but this has since been rejected by the Republicans.

Elsewhere, the Australian dollar slipped overnight as risk appetite fell due to the euro crisis and uncertainty over the situation in North Korea. Overnight into tomorrow the Reserve Bank of Australia releases its meeting minutes and the RBA is expected to maintain a downbeat tone.

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. Go to www.smartcurrencybusiness.com/winespirit for more information or call on 0207 898 0500.

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