Sterling fell below $1.60 against the US dollar for the first time since April 1 and fell below €1.12 against the euro as retail sales figures for the UK fell to the weakest level in a year. This was seen as justifying the Bank of England’s decision earlier in the month to keep interest rates steady and potentially increase stimulus via further Quantitative Easing if needed. In the minutes from the Bank’s meeting earlier in the week, policymakers voted 7-2 in favour of no change to policy and to call on further stimulus if UK growth continued to suffer. PM David Cameron yesterday said that he had received assurances that the UK will not be asked to contribute to a further Greek bailout. On a positive note, UK public sector net borrowing fell by 6% on last year, so at least the government’s plans are having an effect. Mervyn King speaks later today, which could see some movement if he gives any clues on future interest rate policy. Call in now for a live exchange rate.

In the euro zone, it has been a turbulent week for the region. We saw finance ministers delaying a key tranche of Greek bailout finance pending approval of austerity measures by the Greek parliament. Greek PM George Papandreou had to win a key confidence vote in order to pave the way to enacting tough austerity legislation and there was rioting on the streets of Athens. With Greece essentially bankrupt, there is an assumption that following the vote, a further bailout will be agreed. There is still significant volatility related to the euro exchange rate and bizarrely sterling is floundering against the euro due to interest rates. Call in now to plan a currency strategy and avoid losing out.

In the USA, the US dollar strengthened against most of its major counterparts this week as Federal Reserve Chairman Ben Bernanke said that the US recovery was progressing “more slowly” than expected. In the Fed’s interest rate policy meeting this week, policy makers decided to keep rates near zero and complete the $600bn second round programme of asset purchasing later this month. Figures showed that purchases of existing homes fell last month which also dented expectations of a recovery. Call in now for a live exchange rate.

Elsewhere, the panic caused by the Greek crisis dented ‘riskier’ based commodity linked currencies, as investors pulled out to safer haven assets. On Thursday, the South African rand declined the most in more than a month against the US dollar as investors sold riskier assets. The Australian dollar slipped also as the central bank signalled there was no scope for monetary tightening at the moment.

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