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Sterling posts losses against dollar and euro on hung parliament worries

US Dollar:

Global investors are reeling from news of charges against Goldman Sachs, with worries about Greece’s debt and the economic fallout from the Icelandic volcano eruption adding to downward pressure on financial stocks, in turn rallying the safe haven dollar. The US Securities and Exchange Commission, in a civil suit, accused Goldman of “defrauding investors by misstating and omitting key facts about a financial product ties to subprime mortgages as the US housing market was beginning to falter”. The news shapes up as a major blow to financial stocks and global investors appetite for riskier currencies. The dollar soared against sterling by over two cents to hit $1.5233 and took over a cent on the euro to trade under the $1.3450 level. USD/JPY fell back below 92.00 as speculation of a possible near-term CNY revaluation prompted short-term players to sell the pair on the view that a stronger CNY would weigh on the dollar, says senior FX dealer at major Japanese trust bank. The revival of risk aversion has benefitted traditional safe-haven assets, like the dollar and the Japa¬nese yen.  Data 15.00: CB Leading Index M/M expected 1.0% unchanged. Speakers 14.00: Bernanke.    


Sterling took a hit against its major currency rivals over the weekend after initially nose diving against a rallying dollar on Friday after the shock news of Goldman Sachs being served with a civil lawsuit by the SEC. Cable was happily trading around the $1.5450 levels late last week, but then global players sought safety in the dollar and yen, pushing GBP/USD down to trade under the $1.5250 level this morning. Risk appetite dried up following declines in global stock markets to send the pound down against the dollar on risk aversion. Polls showing the Lib Dems gaining in popularity has also pushed the prospect of a hung parliament in the UK closer, dragging down the value of the pound. This, despite the ongoing problems in the Eurozone with Greece’s con¬tinuing debt worries saw the pound falter against the euro, pushing GBP/EUR lower by a cent from Friday’s 1.1432 to trade at 1.1325 in early Monday morning trade. UK house prices rose sharply in early April from March, boosted by activity among cash rich buyers paying premium prices for home sin desirable areas. This had little affect on an already faltering pound. Looking ahead, the preliminary reading of Q1 GDP due Friday is expected to show the economy expanded at the same pace as reported in the final quarter of 2009, while the annual change should all shy of being flat, economists say. No data.


The single currency has seen a surprise move higher against sterling since Friday, as the up and coming election in the UK shows more sign of a hung parliament as a result, negative for the UK currency. This saw EUR/GBP gain by over half a percent to move  to 0.8828. All this on the back of continuing worries in Greece regarding its debt worries which will not be going away anytime soon. The Goldman Sachs story which broke Friday combined with Greece's financial problems has now seen EUR/USD fall a cent and a half to the $1.3450 level. Looking at the Greek debt story, the no flight ban in Europe has delayed the IMF, EU, ECB visit to Greece. But the ongoing concern is even is they can deal with Greece's debt problems, who’s next? Looking ahead, the German ifo business confidence survey for April, due Tuesday, is forecast to follow the ZEW index higher, boosted by expanding global economic growth. No major data.


• A third of DJIA and more than 20% of the companies in the S+P will post quarterly results this week. Wall Street’s largest investment banks—Goldman Sachs Group, which reports Tuesday, and Morgan Stanley, which reports a day later. For Goldman, investors may be more interested in Friday’s civil complaint from the SEC


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GBP/USD 1.5240
GBP/EUR 1.1330
EUR/USD 1.3460
GBP/JPY 139.89
GBP/AUD 1.6601
GBP/NZD 2.1510
GBP/ZAR 11.3270
GBP/CHF 1.6241
GBP/CAD 1.5492
GBP/SGD 2.1020
GBP/THB 49.21
GBP/HKD 11.8340 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