Sterling hits 11 month high against euro

Published: 22 December, 2011

Sterling hit the highest level against the euro since January 2011, breaking through €1.20/£1 and hitting a high of €1.2043/£1.

Sterling hit the highest level against the euro since January 2011, breaking through €1.20/£1 and hitting a high of €1.2043/£1

Currency rates - December 22

EURO/GBP - 1.2002

US$/GBP - 1.5674

CHF/GBP - 1.4665

CAN$/GBP - 1.6094
AUS$/GBP - 1.5530
ZAR/GBP - 12.8982
JPY/GBP - 122.45
HKD/GBP - 12.1998

NZD/GBP - 2.0375

SEK/GBP - 10.7842

AED/GBP - 5.76

US$/EURO - 1.3065

Strong demand for lending from the ECB has failed to alleviate concerns over the European debt crisis. Despite sterling's strength against the euro, the Bank of England minutes were pretty downbeat with policymakers mulling over further Quantitative Easing in February but this had little impact on the pound.

In the euro zone, in the first ever offer of cheap three year loans by the ECB, banks snapped up €490bn of the funds on offer suggesting that the banking system in the region is heading for an impending funding squeeze. One trader compared the lending as papering over the cracks of a crumbling house. Sterling is expected to move towards €1.25 in the coming months and with total funding requirements in 2012 for sovereign debt sitting at over €1 trillion, this is unsurprising.

In the USA, it was a relatively quiet day for data in the USA, with the major action taking place in Europe with the ECB funds issue. Initially there was a boost to risk appetite from the uptake which saw the US dollar weaken off. However, as markets began to realise the implication of such an oversubscribed take up, risk appetite reversed and the US dollar strengthened. Call in now for a live exchange rate.

Elsewhere, the Canadian dollar stayed pretty flat despite retail sales figures coming in higher than expected. As data starts to thin out ahead of Christmas, ensure you don't get caught out by any volatility.

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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