EURO/GBP – 1.165
US$/GBP – 1.484
CHF/GBP – 1.646
CAN$/GBP – 1.518
AUS$/GBP – 1.649

Sterling gained against the US dollar throughout most of yesterday, hitting a high of $1.5054/ £1 as speculation over a deal between the Conservatives and Liberal Democrats helped calm market concerns over the political situation in the UK. Despite being up nearly 1.7% against the US dollar, the pound fell in late trading as news of Gordon Brown’s resignation opened the doors for a potential Labour-Lib Dem coalition and left the markets as concerned as they were at the start of the day. Against the euro, the pound was fairly volatile as traders digested the announcement of a 550bn package to help Greece avoid defaulting on its sovereign debt. The announcement initially caused the euro to strengthen, but the pound recovered ground later in the day as the Bank of England kept interest rates on hold and kept the emergency funding level at £200bn. Out later today we have manufacturing and industrial production data for the month. The key market moving data is the continued uncertainty over the election. Call in now for a live exchange rate.

In the Euro zone, the euro started the day well, recovering losses against the US dollar following the announcement of a new bailout deal. The bailout saw stock markets rally by several percentage points. However, in trading early this morning, the gains made by the euro have been lost again as the wave of optimism created by the 750bn injection has given way to concerns that the support will not avert a slowdown in the region as seen in Japan in the 90’s and in the USA in 2008-09. At this stage, the bailout has eased some of the concern of the last few weeks, but the Euro zone now has a tough few years ahead of it. Out today we have had German inflation data which has shown an unexpected rise. This has had little effect on the euro though. Get in touch now to ensure you plan your next payment efficiently.

In the USA, Deutsche Bank – the world’s biggest currency trader – said that the US dollar is likely to extend its 12% gain against the euro as Europe needs more than just emergency funding to help strengthen the single currency. Looking at purchasing power parity (the equivalent cost of two identical goods in two different currencies), the bank’s ‘fair value’ exchange rate prediction for the /$ is between the 1.15 – 1.20/ $1 marks. Following yesterday’s bailout the US stock markets surged by nearly 4%. Out today, we have some minor economic data which is unlikely to have any effect. Get in touch now for a price.

Elsewhere, Chinese inflation jumped 2.8% since last April and with inflationary measures building, the country’s economy is at risk of overheating. This builds the case for stronger interest rates in the country and a revaluation of the currency to allow it to strengthen. The Chinese yuan is ‘pegged’ (i.e. fixed) against the US dollar. Any revaluation of this could impact UK importers as prices of goods in the country will rise. Additionally, yesterday saw the Polish zloty’s biggest daily gain ever – gaining over 2% against the pound as the currency benefited from the European bailout. However, the currency has reversed some of these gains this morning. Get in touch now to ensure you don’t miss out.

Exchange rates change every second – call Smart Currency Exchange for a live up-to-the-minute quote on our Freephone number: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or fill out our online quote form at: SmartCurrencyExchange.com/quote.aspx