Sterling on high against US dollar

Published: 31 May, 2011

Sterling finished last week on a high, gaining against a weaker US dollar as US data disappointed.

Currency rates

EURO/GBP - 1.1457
US$/GBP - 1.6518
CHF/GBP - 1.4037
CAN$/GBP - 1.6026
AUS$/GBP - 1.5427
ZAR/GBP - 11.382
JPY/GBP - 134.72
HKD/GBP - 12.847
NZD/GBP - 2.0002
SEK/GBP - 10.181
US$/EURO - 1.4417

Sterling therefore starts the week over $1.65/£1 against the US dollar, but this is more the pound tracking euro strength against the dollar. With a long weekend in both the UK and USA, data is thin on the ground today. However, there is a wide range of data on the manufacturing, construction and services sectors later in the week.

In the euro zone, the big news from the long weekend for those returning to their desks today is that European Union leaders will decide on additional aid for Greece by the end of June. Following a meeting in Paris yesterday, Jean-Claude Juncker (head of group euro-area finance ministers) ruled out a "total restructuring" of Greek debt, with the EU and IMF set to wrap up their recent review of the stricken country's finances. This has helped the euro to recover from lows hit due to concerns that Greece may even need to leave the euro zone completely.

In the USA, the US dollar slipped against a basket of currencies to the lowest level in three weeks, having fallen towards the end of last week after poor data dented the outlook for the US currency. With a recovery from the euro off the back of positive moves on Greece, the US dollar is not an attractive prospect for many investors. Later this week we have manufacturing and employment figures that are likely to cement the view that the US recovery will remain sluggish for now.

Elsewhere, the New Zealand dollar jumped to a record high against the US dollar on speculation that the central Bank will raise interest rates after a report showed that business confidence rose to a 12 month high in May. Following the recent earthquake, an emergency rate cut was made in order to compensate for any lack of growth, but many analysts now expect this to be reversed soon.

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