Smart Daily Currency Note | A day of two halves for sterling at the end of last week
GBP/USD – 1.6195
It was a day of two halves for sterling on Friday, remaining fairly range bound against most of its major peers until the early afternoon when increased levels of risk-aversion saw a significant shift in favour of the traditional safe haven currencies. Increasing concern that deficit-reduction talks are not doing enough to help stave off the current ‘fiscal cliff’ saw sterling lose substantial ground versus both the US dollar and Japanese yen; undoing much of its previous gains. News that GDP data had been revised down from 1 per cent to 0.9 per cent also helped contribute to sterling’s poor performance. Friday also saw the release of better than expected current account data, while Public Sector Net Borrowing came out worse than previously forecast. As would be expected, this week sees very little news coming out of the UK, so call in now to see if Christmas cheer can help lift sterling.
The US dollar was in full rebound mode on Friday, with concern that a deal would not be reached over the fiscal cliff affair driving traders back to the safe haven currencies of the US dollar and Japanese yen, driving the price up. It is, unsurprisingly, a quiet week for data, and as long as the political brinkmanship over the fiscal cliff continues we could see the dollar continue to strengthen as thin trading volumes make other currencies look an even riskier proposition. Aside from this, some data is released on Thursday; unemployment and consumer confidence data is usually very influential, and good results have the potential to bring risk appetite back to the markets, but only if the fiscal cliff has been avoided. Get in touch now to get the most up to date price.