Sterling fell against the US dollar yesterday, hitting a low of $1.5450/£1 as investors became increasingly convinced that the Bank of England is likely to announce some form of Quantitative Easing in Thursday’s monetary policy committee meeting. UK data surprised the markets, with manufacturing activity showing a marginal expansion against analyst expectations of a contraction in activity over the previous month. Services sector data is released on Wednesday and with the economy struggling, this is expected to be poor. Sterling did however hit the highest level against the euro since March, coming just short of €1.17/£1 as investors became more and more concerned with the debt crisis in the euro zone.

In the euro zone, debt concerns in the region continued to dominate currency market movements, with investors taking a risk adverse stance for the start of the week. The euro fell to the lowest level against the Japanese yen since June 2001 as investors looked to safer haven currencies as European policymakers looked to thrash out a deal to solve the crisis. In addition, monetary policy is back on the agenda, with many expecting the ECB to look to cut interest rates as early as this week. Ensure you call in now for a live exchange rate.

In the USA, manufacturing figures followed the UK in beating expectations and showing an improvement contrasting with a slowdown in Chinese manufacturing. The US dollar hit an 8 ½ month high against the euro on concerns over the debt crisis. Many analysts feel that the euro is set to fall much further against the US dollar, exemplified by the number of bets against the euro. Later this week we have key non-farm payroll figures, so ensure you don’t lose out to adverse movements by speaking to one of the team today.

Elsewhere, as a result of the euro zone crisis and concerns over a cooling of growth in China, the risk sensitive Australian dollar fell to a 10 month low against the US dollar. A slowdown in China will affect demand for Australian commodities and as such, dent Australian prospects. Call in now for a price.

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