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Sterling & Euro trade higher on the dollar as risk sentiment returns

US Dollar:

US labor data came in much better than expected on Friday, as fears that bad weather would have led to larger job losses proved unfounded. The greenback gave up close to a couple of cents on sterling, from the $1.50 level to closing in on $1.52. Even the euro saw modest gains on the dollar, as Greece’s problems with its debt seemed to ease, pushing EUR/USD up by one and a half cents to $1.3650. With risk aversion lifting and confidence about the global recovery improving, there may be further downward pressure on the US dollar later this week. Be prepared though for some see-saw moves as an improving US economy may also be positive for the dollar, if negative views on sterling/euro remain. Friday’s rosier US jobs numbers poured jet fuel on investors bets on riskier assets, so the traditional risk story seems to be back in play. The standout data for this week include the US trade deficit, likely to be unchanged little in January, according to economists predictions for the report out Thursday. No data. Speakers: Fed’s Sack speaks to economists.



The pound took some support from a return of risk appetite in the currency markets over the weekend, after the dominating US jobs data was released which were better than expected. This overshadowed the pound’s weaknesses, albeit possibly for a short time as the dollar was sold off against more riskier bets in cur-rencies. This saw cable roar back over two cents, to push GBP/USD close to the $1.52 level. There was even some support for the pound against the euro, with up to a cent taken back to push GBP/EUR close to the 1.1130 level.   Mounting fears over a hung parliament in the up and coming general election, hammered sterling early last week, with the pound down more than four cents against the dollar, to below the $1.48 level. Sterling recovered slightly later in the week to back over the $1.50 level, but is expected to be in for a period of volatility ahead as political uncertainty in the run up to the election continues. Some analysts are calling for GBP/USD to trade as low as $1.43 over the next few months, if the prospect of a hung parliament becomes more real. The markets concern is that a hung parliament, with no majority government, would lack the leadership and political will required to take decisive action on Britain’s record deficit. If that was the case (worst case scenario) Britain could lose its AAA credit rating. In other words, just look what is happening in Greece!! No data.



The euro has opened mixed against the majors this morning with a small decline against sterling, but a move higher against the US dollar. Instead of Greece being the word today, its seems ‘risk’ has taken its place with a better than expected US jobs number seen Friday, moving investors out of safe haven currencies such as the yen and dollar and into the euro and pound. Analysts commented strains over Greece’s massive deficit and debt problems appeared to ease after Athens successfully sold bonds to raise €5bn on the back of its latest austerity package. French President Nicolas Sarkozy yesterday said a number of European Union countries were preparing a support package for Greece, even though he doesn’t believe the Greek government will need financial help. Among the eurozone data this week, industrial production is expected to rise on the month in January after a disappointing drop in December.
Data 11.00: German Factory Orders.



• The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual.

• Oil breached $82 per barrel, extending last week’s rally on a better-than-expected US jobs report.

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GBP/USD 1.5184
GBP/EUR 1.115
EUR/USD 1.3672
GBP/JPY 137.14
GBP/AUD 1.6672
GBP/NZD 2.11682
GBP/ZAR 11.2402
GBP/CHF 1.6268
GBP/CAD 1.5609
GBP/SGD 2.1254
GBP/THB 49.65
GBP/HKD 11.7925 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 6851