Oil Prices Drill The Pound Down

Exchange rates have shifted in the past twenty four hours as the sudden acceleration in oil prices, caused by tensions in Libya, have sent the Euro higher and weakened Sterling. Currency investors have taken out long positions based on their view of how the surging oil prices will affect inflation and be withstood by the various global economies. Oil prices are now at the highest levels since August 2008 as unrest in Libya is set to disrupt oil supplies. Should this continue, the Euro may continue to strengthen so speak with your broker about any transfers involving the Euro and how rates are moving.

Pound Sterling – UK Markets

The Pound has fallen to a three week low against the Euro and has also been dropping against the US Dollar so far today having lost the momentum provided by yesterday’s Bank of England minutes. The minutes suggested that an interest rate rise has now been ear marked for early summer. Rising oil prices are causing long positions to be taken due to the potential impact on future interest rates culminating in Sterling weakness compared to Euro strength. The Confederation of British Industry have reported that sales volumes have increased from a year ago overall continuing last week’s positive retail figures.

US Dollar – US Markets

The US Dollar has dropped against the Euro as well as other major currencies other than the Pound before US housing and jobless data later today. The upcoming data made the Swiss Franc once more the preferred ‘safe haven’ currency whilst events in Libya continue. Soaring oil prices also caused fresh concerns about how the US economy could cope. The US economy is also looking comparatively weak in respect to the UK and Europe where interest rate rises are expected.

Euro – European Markets

The Euro has gained in response to rising oil prices, strong economic data from Germany and hawkish comments from some individual council members at the European Central Bank about the possibility of an interest rate rise. The Euro traded near levels close to a three week high against the US Dollar as European new industrial orders yesterday came in above target at a year on year reading of 18.5 percent.

Other Currencies – Highlights

The Swiss Franc has climbed to record levels against the Dollar and the Yen, steaming ahead as the safe haven currency of choice, in response to economic uncertainty due to tensions and violence in Libya. The Australian Dollar has also gained against most major counterparts following positive business investment figures revealing a 1.3 percent increase for the fourth quarter of 2010. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.