Sterling came off a five-week high against the US dollar yesterday, with investors wary of UK data activity showing lower than expected figures this week. Investors said that sterling was overvalued above $1.63/£1 against the US dollar – especially if today’s GDP figures disappoint as many expect. Some analysts compared moves between sterling, euro and the US dollar to an ugly contest in recent weeks. Whilst the UK economy has a credible fiscal plan in place, it has been held back by weak economic growth. Prime Minister David Cameron yesterday warned that Britain’s path to growth will be a difficult one and there was no more money for another round of Quantitative Easing. Call in now for a live exchange rate.

In the euro zone, credit rating agency Moody's cut Greece's credit rating further into ‘junk’ territory yesterday and said it was almost certain to call a default on debt given the new bailout, which trimmed the country’s payouts to many holders of Greek debt as the private sector shouldered some of the burden. In a day of volatile trading and concern over a lack of a decision on the US debt ceiling saw many investors selling the euro and US currency. Call in now to avoid losing out.

In the USA, Republicans and Democrats yet again failed to reach a deal on the debt ceiling, fuelling concern the U.S. faces a credit-rating cut and sapping demand for Treasuries. Confidence in politicians’ ability to solve the debt crises globally collapsed yesterday as a result, sending stock markets into a tailspin and increasing the cost of sovereign borrowing. Safe haven assets saw a boost and the Swiss franc hit a record high against the euro and US dollar in what one trader referred to as the “plague on both your houses” investment in reference to concerns over both the euro and US dollar.

Elsewhere, amongst the current market panic over the USA and the euro zone, commodities are losing their influence over currencies of nations that depend on raw materials exports. With investors seeking safe havens, currencies such as the New Zealand and Australian dollars have been suffering as traders look elsewhere.

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