Sterling slipped against the US dollar yesterday, falling off 2 month highs as data showed that UK factory orders declined more than estimated and manufacturer optimism dropped to the lowest level in 2 years. Sterling also fell against the euro as the figures boosted the case for the Bank of England to keep interest rates on hold at record lows. Tuesday’s GDP data showed that UK economic growth for the 2nd Quarter was poor and as a result the Bank is likely to leave monetary policy alone until at least next year. Out later today there is consumer confidence data, so call in now for a live exchange rate.

In the euro zone, the single currency fell below $1.44/ €1 against the US dollar yesterday as stock markets reflected investor concerns over the US stalemate over the debt ceiling negotiations. Germany’s Finance Minister Wolfgang Schaeuble also made comments that didn’t help the euro after objecting to Germany writing a “blank cheque” to help the euro zone rescue fund to buy bonds. The euro continues to remain strong against the pound on favourable interest rate differentials – call in now for a live exchange rate.

In the USA, the US dollar advanced from the lowest level since May against several other major currencies as investors bizarrely looked to the US dollar as a safe haven currency. With no fresh news on the debt negotiations yesterday, the US dollar rallied slightly although this could remain to be shortlived. Most market participants believed the deficit reduction proposals being discussed in Congress fall short of the required budget cuts necessary to avert a U.S. debt downgrade by ratings agencies.

Elsewhere, the Australian dollar made large gains against the US dollar as consumer prices rose more than forecast. In addition, the ultra safe haven of the Swiss franc continued to make ground against the US dollar as safe haven demand for the currency kept it in demand. Call in now for a live exchange rate.

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