Sterling breaks through 1.60 barrier against dollar

Published: 02 April, 2012

Sterling strengthened against the US dollar on Friday breaking through the 1.60 barrier for the first time since November 2011.

Currency rates - April 2

EURO/GBP - 1.1998

US$/GBP - 1.6020

CHF/GBP - 1.4456

CAN$/GBP - 1.5967

AUS$/GBP - 1.5389

ZAR/GBP - 12.24

JPY/GBP - 132.98

HKD/GBP - 12.4424

NZD/GBP - 1.9527

SEK/GBP - 10.5921

AED/GBP - 5.8826

US$/EURO - 1.3352

INR/GBP - 81.42

Manufacturing, services and construction Purchasing Managers' Index (PMI) are released this week; but, the main focus will be on Thursday when we will discover if the Bank of England will further expand the asset purchase program. The official bank rate is widely expected to remain at 0.5%.

The euro was strong against the US dollar and the Japanese yen as Spain announced its budget which includes plans to make additional cuts to save more than €27 billion. On Friday the EU finance ministers agreed to increase the safety fund to €700 billion to protect the region from further economic crisis. The European Central Bank's interest rate decision will be announced on Thursday with the general consensus suggesting that the rate will remain at 1.00%.

The US dollar had a varied day on Friday weakening against sterling as mixed economic data was released. US PMI data and a raft of unemployment data will be released this week which could move the market significantly as it has done in the past.

Elsewhere, the Australian dollar had another poor day weakening off against the majority of currencies. Canadian GDP data was released as expected at 0.1%. Chinese manufacturing PMI was released on Friday with a higher reading than forecast; however, some analysts think the increase is only "seasonal". Out this week, we see a raft of data released from Australia including retail sales figures, trade balance data and the RBA's interest rate decision which is currently expected to remain on hold. There is also the release of unemployment data from Canada.

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