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Posted December 14th, 2012 by Charles Purdy

Smart Currency Rates and Comments 14th December 2012 – The euro finishes the week on a high

GBP/USD – 1.6128

A difficult week for sterling as it weakened off against the euro and the higher yielding currencies. It did strengthen against the US dollar and Japanese yen as risk appetite was a key driver in the market. A raft of better than expected employment data did help support sterling. Data released showed that full-time hiring had reached a one and a half year high, unemployment benefit claimants actually fell by 3,000 in the last 3 months when a 5,900 increase had been anticipated and the overall unemployment rate stayed at 7.8% when a marginal increase had been expected. Sterling struggled yesterday however, as a report showed the majority of U.K. manufacturers are seeing a decline in orders. This in conjunction with the fear that the Bank of England will resume quantitative easing and the news that Standard and Poor’s (one of the big three credit rating agencies) had put a negative outlook on the UK’s AAA credit rating pushed sterling weaker against the majority of its major peers. With very little data out today, we don’t anticipate much volatility, but we are in the run up to Christmas where trading volumes are low and rates can change quickly so get in touch for up to the second pricing.

It has been a broadly poor week for the dollar as the fast approaching Fiscal Cliff has weighed heavily in the minds of traders. A resolution must be reached by the end of next week as the Christmas period interrupts proceedings after that. The Federal Reserve (the American equivalent of the Bank of England) announcement of an increase in asset purchasing by $45 billion a month, a third round of quantitative easing, also hit prices in the middle of the week. Today the most influential data release is on inflation, and as trading volumes decrease in the run up to the break, expect increased volatility in pricing. Get in touch now for the most up to date rates.

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