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Sterling falls due to downward revision of UK growth figures

Published:  23 December, 2010

In the last daily currency note before Christmas, sterling fell to a three month low against the US dollar.

In the last daily currency note before Christmas, sterling fell to a three month low against the US dollar.

Smart Currency daily rates

EURO/GBP - 1.1738
- 1.5411
- 1.4656
- 1.5590
- 1.5372
- 10.4225
- 129.692
- 11.9872
- 2.0632
- 10.5671
- 1.3114

HUF/GBP - 324.15


It comes after a downward revision to the UK's growth figures for the 3rd Quarter reminded investors how fragile the road ahead is for the UK economy. Figures showed that against an initial estimate of 0.8%, GDP for June to September grew by 0.7% and in thin trading conditions ahead of Christmas, losses on sterling were exacerbated. However, the Bank of England's minutes showed that policy makers were growing more and more concerned about inflation and as such the possibility of tighter monetary policy in 2011 kept the pound supported. Today is the last day of data, with some mortgage approval figures for the UK - whilst it is Christmas, there is still significant movement possible.

In the Euro zone, the euro has seen some strength today after it became clear that China had been buying large amounts of euros to hold in reserve but it still came under pressure on warnings over credit rating downgrades. In particular, a newspaper report in Portugal suggested that Portuguese debt had been bought heavily by the Chinese government. China's central bank declined to comment though. It is looking like an interesting year ahead for the euro, with European bonds likely to be the big talking point - currently each country issues its own debt, and there has been talk of a centralised 'Euro-bond' to help stabilise the region.

In the USA, global stock markets gained yesterday following increased optimism over global economic growth, whilst the euro hit an all time low against the Swiss franc. The US dollar gained after GDP amendments showed that US GDP for the 3rd Quarter came in a touch better than had been initially estimated. With the Christmas trading very thin, the US dollar moves were exaggerated. Call in now if you need to buy currency in the next few days as there is scope for significant movement as a result of lower trading volumes.

Aside from that, let me (and all the team here at Smart Currency Exchange) wish you and your family a very Merry Christmas and extend our best wishes for a prosperous 2011.

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