Sterling takes a hit

Sterling took a battering yesterday against a basket of currencies including the Euro to which it lost 1.7percent. GBP is currently trading at a rate around 1.1350 against the Euro, a level which has not been seen since November 2010. Clients looking to move money further a field would do well to speak with their broker as commodity prices in conjunction with comments from George Osborne have seen the Aussie Dollar gain 2.2% against Sterling since yesterday morning. If you have funds to transfer, now is an opportune moment to consider taking out a market order which enables us to watch the markets for you 24hours a day.

Pound Sterling – UK Markets

Sterling slid to a four-and-a-half month low against the euro yesterday as weak retail sales raised concerns about a fragile economy. The volume of UK retail sales fell by more than expected in February, dropping by 0.8% on the previous month and the January figure was revised downwards with the volume increasing by 1.5% rather than 1.9%. This in conjunction with Chancellor George Osborne saying that the 2011 forecast for UK gross domestic product growth would be 1.7%, down from a previous estimate of 2.1% has damped Sterling’s strength as it is becoming unlikely that a rate rise will happen anytime in the near future.

US Dollar – US Markets

The US Dollar has gained 1.3percent against Sterling since yesterday morning with a current rate of around 1.6073. The Dollar has been gaining some strength after positive retail sales, and slightly improving jobless figures, but is not out of the woods just yet. US retail sales are growing strongly and monthly sales figures showed February had its eighth consecutive month of growth at 4.1%. January's overall figures were revised upwards, to 0.7percent. However, higher energy and food prices are likely to start affecting household budgets in the next month or two.

Euro – European Markets

European leaders have agreed a restructuring for a bail-out fund that they hope will resolve the Eurozone debt crisis which has given some strength to the Euro. The talks were slightly overshadowed by Portugal who denied the need for a bail out but are in for a turbulent time after its government collapsed on Wednesday. Some suggest that Portugal is in need of an estimated €80bn bailout but Lisbon is so far in denial. If it does need a rescue package the effects would be far reaching, including the UK who could face up to 14percent of the bill. To add further uncertainty, credit rating agency Moody’s downgraded 30 of Spain’s smaller banks yesterday but left the big three untouched. (La Caixa, BBVA and Santander). EUR/USD bounced off 1.4050 overcoming the collapse of the Portuguese government and the Spanish banks downgrade but there is certainly a cloud loaming over the euro at the moment.

Other Currencies – Highlights

The Australian Dollar recovery against the USD from the 0.9700 area has extended sharply this week, supported by surging gold prices, breaking above the 1.0200 resistance area on Thursday, to a long-term high of 1.0255, likewise we have seen the Aussie dollar gain 2.2percent against the pound since yesterday morning. The International Monetary Fund (IMF) says it believes Japan's economy is strong enough to afford the cost of rebuilding the damage from the earthquake and tsunami and it expects a short-term drop in the economy, but no long-term impact.