Sterling holds firm against the euro

Published: 18 May, 2012

Sterling hit fresh highs against the euro this week due to the crisis in Greece, before weakening off against the majority of currencies yesterday.

Smart currency - May 18

EURO/GBP - 1.2451

US$/GBP - 1.5771

CHF/GBP - 1.4958

CAN$/GBP - 1.6092

AUS$/GBP - 1.6051

ZAR/GBP - 13.251

JPY/GBP - 124.98

HKD/GBP - 12.2534

NZD/GBP - 2.0841

SEK/GBP - 11.401

AED/GBP - 5.7941

US$/EURO - 1.2668

INR/GBP - 86.39

The Bank of England inflation report revealed a downgrade of its growth forecasts for the UK economy largely due to the fears spreading from the Eurozone. Other data released also revealed that the UK posted a slightly larger trade deficit than anticipated.

The euro came under a lot of pressure this week as fears spread that Greece could soon leave the Eurozone. As no government has been formed in Greece, another election has been scheduled for June 17. Moody's has downgraded 16 Spanish banks, and Fitch has also downgraded Greece causing further concern for investors. With no data out of the Eurozone today, the global markets will keep a very close eye on any news coming from Spain or Greece as fears surrounding the single currency continue to dominate the news.

The US dollar was a strong performer this week driven by investors seeking a "safe haven" for their money. US industrial production increased 1.1% in April, the strongest months growth since December 2010. Rumours started to spread that the Federal Bank could soon look to inject more money into the economy if it loses momentum.

Elsewhere, the commodity backed currencies struggled this week and the Japanese yen strengthened as risk aversion drove the market. Core Canadian Consumer Price Index (CPI) figures released today will show the change in the price of goods and services purchased by consumers.

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