Tracking the pound against key currencies

Further quantitative easing worth £50 billion – which, in short, dilutes the strength of our currency – announced last week, combined with an expected hike in unemployment and the threat of a return to negative growth continue to hinder the pound from making any significant, or long-standing, gains against other currencies.

Meanwhile the Eurozone is in no better position. The crisis there rumbles on, with the latest twist being Greece’s acceptance of more austerity measures demanded by its creditors and where that could lead. Plus, figures due out soon are likely to show that the Eurozone slipped into a downturn in the final quarter of 2011. As expectations that the pound will gradually gain against the euro, the battle between the two currencies remains a closely matched tug-of-war, the question being could one side seriously lose its footing at any point?

The US dollar is holding firm and its choice as a safe haven currency for international savers is becoming more noticeable again. The US economy grew by 2.8 per cent in the final quarter and interest rates are likely to remain untouched until 2014. This relative stability is likely to see the US dollar only gain against the pound as the year unfolds.

Elsewhere, the pound lost marginal value against the Australian and New Zealand dollar, but gained slightly against the Canadian dollar.

See below to see how the pound has performed against key currencies over the past month:

Based on central bank/ IMF rates

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