Sterling strengthens against dollar due to growth in UK exports

Published: 26 May, 2011

Sterling strengthened for a second day against the US dollar.

Currency rates - May 26

EURO/GBP - 1.1502
US$/GBP - 1.6305
CHF/GBP - 1.4198
CAN$/GBP - 1.5935
AUS$/GBP - 1.5393
ZAR/GBP - 11.401
JPY/GBP - 133.63
HKD/GBP - 12.688
NZD/GBP - 2.0159
SEK/GBP - 10.233
US$/EURO - 1.4174

Data showed that U.K. exports helped the economy resume growth in the first quarter, outweighing the biggest slump in consumer spending in almost two years. Sterling also gained against the euro, breaking beyond €1.15/£1 against the single currency as euro weakness gave sterling a boost. The biggest gains were against the South African rand, where sterling surged by nearly 2%.

In the euro zone, the euro hit a fresh low against the 'safe haven' Swiss franc yesterday on uncertainty over the Greek debt crisis. Greek newspaper reports suggested the Greek government is considering organising a referendum on additional austerity measures after it failed to reach consensus with the opposition, casting further doubt on the country's ability to tackle its debt crisis. The lack of clear direction over the country's issues is causing concerns amongst global investors. Despite this, the euro strengthened against the US dollar on rumours that China has been actively buying Portuguese "bail out" bonds.

In the USA, the US dollar had strengthened against the euro on concerns over the Greek debt crisis, but the euro has seen some strength overnight. Data showed that US durable goods orders decreased 3.6% following a 4.1 percent jump in March, falling the most in six months, which did not help the currency. In addition, house prices in the U.S. declined 0.3% in March from February, less than the 0.5% drop forecast in a Bloomberg News survey.

Elsewhere the South African rand fell to its weakest level in more than two months against the dollar as concern that Europe's debt crisis is deepening sapped demand for higher- yielding, 'riskier' commodity based assets. Australia's dollar also slipped on a report that the Chinese sovereign wealth fund would buy New Zealand assets.

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