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Pound paints mixed picture as GBP/EUR rallies but cable slides

To the good news to start a fresh week off, as the pound continues its pull back against the under pressure euro as GBP/EUR hits a week high to see the currency pair touch 1.1450 this morning. As most of you will probably be aware, this isn’t on the back of the UK economy firing on all cylinders, far from it. It comes on the back of falling confidence in the eurozone and its ability to sort out the ongoing sovereign debt crises, which is sapping demand for risk and dragging the single currency lower. On the back of this lack of risk appetite, we have seen the pound fall against its US counterpart as cable declines again to post a 3 week low at $1.6130. Data out of the UK didn’t exactly help the pound either as the UK high street suffered its worst August for two years, as wet weather, rioters and the increasingly gloomy economy conspired to keep shoppers away.
Data 09.30: Services PMI 54.3 from 55.4.


The euro slid to a week high versus sterling and a three week low versus the dollar & yen, after German Chan-cellor Angela Merkel failed to sway voters in her home state with a campaign based on her handling of the regions debt crises. The result in the eastern state where Merkels election district is located means her national coalition has been defeated or lost votes in all six German state elections so far this year as voters resist her bid to prevent a euroregion breakup by putting more taxpayer money on the line for bailouts. Another reason for euro weakness points to the premium European banks paying more to borrow in dollars through the swaps market, which have increased to the most since may 2010, a sign of concern that officials in the region are struggling to contain the fiscal crises.  
Data 10.00: Retail Sales m/m 0.1% from 0.7%.


The dollar rose against most of its major peers on the back of a combination of a loss for Germany's ruling party stoking concern support will fade for bailouts of the euro area, a fall for China’s service sector and a drop in Asian equities overnight. The greenback advanced versus the euro, pound and commodity currencies as con¬cerns are increasing the European debt crises will worsen. Risk aversion saw the dollar gain against most majors except for the Swiss franc where we saw weakness. The dollar fell for a third day against the Swissie, the longest streak in a month, as investors also bet the Fed may take steps to stimulate growth after the US employment unexpectedly stagnated in August.


• The Swiss franc had its biggest weekly gain on record versus the euro and currencies of commodity ex-porters dropped as stocks fell, boosting safe haven demand.
• China’s Services PMI fell to a record low on weak new order inflows. An indicator of the health of China’s service sector, the number came in at 50.6 from 53.5 in July, pointing to near stagnation in the service sector.


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GBP/USD                        1.6135

GBP/EUR                        1.1415

EUR/USD                        1.4127

GBP/JPY                         123.90

GBP/AUD                        1.5228

GBP/NZD                         1.9164

GBP/ZAR                         11.4260

GBP/CHF                         1.2683

GBP/CAD                        1.5907

GBP/SGD                        1.9456

GBP/THB                         48.20

GBP/HKD                        12.5688

red-down; blue-up (snap shot)

These rates are for indication purposes only.


For more information or to get the latest spot rates contact:

John Paul Georgiou

Senior Foreign Exchange Broker

+44 (0) 20 7959 6917      


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