Sterling suffered following the release of the minutes of the last Bank of England meeting. Voting was the same [6 to 3 in favour of no change in interest rates] and the sentiment was the same – lets wait and see how the recovery takes hold before increasing interest rates. The end result is that the brief bounce that sterling experienced following the high inflation data of Tuesday drifted away as the markets have pushed back possible dates for when the BoE will increase interest rates. Unemployment data came in slightly better than expected at 2.46 million. As can be seen from this weeks movement exchange rates continue to be volatile so call in now to get the latest information and the latest rates.

The debate in the Euro zone is obviously heating up over Greek debt with the European Central Bank being at odds with the politicians. The ECB is taking a hard-line in that any change to repayment dates is a default whereas the politicians want to present it as a “restructuring”. Will be interesting to see who wins and what the outcome is. Despite this the euro still continues to outshine sterling giving the increasing interest rate environment and the strong growth being enjoyed by Germanyand France. Call in now to get the latest rate.

The minutes of the last Federal Reserve meeting were released. Risk aversion increased as it was clear from the minutes that following the completion of the second phase of quantitative easing at the end of June the expectation was for a tightening in liquidity. The Federal Reserve Chairman stated the USeconomy still needs monetary support. It has been suggested that if there is a large enough increase in the $14.3 trillion limit on the nation’s debt, there is a possibility some of these resources will be directed towards helping the Federal Reserve when the central bank chooses to tighten monetary policy. This increased risk aversion benefitted the US$ which is pulling back towards the US$1.60/£1 level.

New Zealand's currency did well yesterday as statistics showed there was a 2.2% increase in producer input prices in the first quarter of this year. The Canadian dollar lost ground as expectations of an increase in interest rates fell against many of its major counterparts and even hit a seven-week low against the US dollar. It hit a low of 97.26 cents. There is speculation that the Canadian dollar will decline to $1.05 against the US dollar by the end of year.

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