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Posted December 19th, 2012 by Charles Purdy

Smart Daily Currency Note | The US dollar continues to weaken

GBP/EUR – 1.2284

It was a somewhat mixed day for sterling yesterday as risk appetite was the main driver in the market. Sterling was slightly down against the euro and Swiss franc, but renewed confidence that a deal would be struck regarding the so-called fiscal cliff in the US drove sterling towards a high point close to 1.627, its highest level since September against the dollar. A broad swathe of inflation data was released, most of which slipped below projections, however, the crucial consumer price index data came in at 2.7%, nearly half a present over the forecast figure, which gave some support to sterling as it decreased the likelihood of more monetary easing in the short term. Today’s financial news in the UK will be dominated by the release of the minutes from this month’s monetary policy committee meeting which some expect to deviate from the recent unanimous decisions on interest rates. If the market reaction to last week’s speech by the ECB president on changing interest rates is anything to go by, any change could see dramatic consequence. Get in touch now to find out which way sterling has moved.   

The euro continued its gains yesterday as the euro looked a less risky proposition given recent reports on the European Central Bank’s (ECB) new role as single banking supervisor and global risk appetite increased. The euro pushed through the 1.32 mark against the dollar reaching a 7 month high, which was matched by gains against the yen and the Australian dollar. Successful Greece and Spanish bond auctions also helped the single currency yesterday. The key data out today is a German survey on business conditions. Last month saw the first positive outlook in six months so a good set of data could support the euro further. However, some analysts suspect that there is very little to justify the euros period of strength and that we are due for a dramatic correction. Certainly poor results would cast doubts over the justification for current euro rate, so get in touch now to take the rates while it lasts. 

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