Sterling hit a 3 ½ month high against the US dollar on Friday as investors favoured sterling over the US dollar and euro on concerns over the sovereign debt crisis. With so many concerns over sovereign debt, sterling also gained support from data that showed the UK government’s public finances posted a surplus in July, putting the government on track to meet its deficit reduction plan. The focus has shifted away from the UK for now as investors look much more closely at the USA and euro zone, but that does not mean the UK is performing well. Simply that it is the ‘least worst’ out of the three. Out this week there is consumer confidence data and revised 2nd quarter GDP data on Friday. Call in now for a live exchange rate.

In the euro zone, the euro was helped to an extent by discussions over central “Eurobonds”, with markets optimistic over the prospect of a centralised funding option, rather than individual governments taking responsibility for their borrowing. This prospect is unlikely for a number of years – if at all. One key European Central Bank official expressed concern over the weekend that countries in the region are not pushing through parliamentary approval of the European Financial Stability Fund quickly enough. This week sees a wide array of economic activity figures for the region including services and manufacturing figures so call in now for a live price to avoid losing out.

In the USA, the US dollar continues to suffer from negative sentiment related to stock markets and debt in the country. As such, the currency was significantly lower on Friday as investors looked for safety in other currencies. Out this week, there is new home sales figures on Tuesday, unemployment data on Thursday and the big release is on Friday in the form of GDP figures for the previous quarter. Ensure you protect yourself by speaking to one of the team here about your options.

Elsewhere, as Libyan rebels enter Tripoli we could see some volatility on markets depending on what transpires. The situation there is still fluid, but given the region’s relationship with oil, we could see some price movement on that and other commodity based currencies such as the Canadian dollar.

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