Sterling dropped from earlier highs against the euro and slid lower against the US dollar after concerns over the euro zone led investors to pull back from exposure to riskier currencies. As had been expected, the Bank of England voted to keep interest rates on hold and keep the asset purchase programme on hold. Whilst this was a key event of the week, markets focussed much more on developments in the euro zone and more or less ignored the Bank of England meeting. It has been a turbulent week on the markets, with sterling hitting a 10 month high against the euro and numerous clients taking advantage of the better rates, now is a great time to call in and speak to one of the team about fixing in preferential rates.

In the euro zone, to say it has been a week of panic is an understatement. In the course of 10 days we have seen the leaders of 2 European countries ousted as they lose their majorities and the focus of the crisis shift rapidly and detrimentally to Rome. Italian borrowing costs shot through the roof – well beyond what are seen as ‘sustainable’ levels leaving many expecting the country would need a bailout. However, the country’s debt is too large to be bailed out by the EU – especially as Italy is meant to be contributing to the European Bailout Fund. Have we seen the beginning of the end for the euro? I’m sure we will know soon enough. Call in now for a live exchange rate.

In the USA, the US dollar has been the subject of ‘risk averse demand’ i.e. investors have been pulling out of high risk holdings and piling funds into the safe haven of US government bonds and cash. This has seen demand for US dollars jump and as such, sterling has had a poor week against the US dollar. Out later today there are consumer sentiment figures and the US markets are shut for Veteran’s Day which could increase volatility.

Elsewhere, sterling has had a good week against the ‘commodity’ currencies as investors pull out of riskier trades and back into the relative safety of the pound. In all this market turmoil and panic, I hope you can take a moment to reflect on this Remembrance Day Friday. Have a great weekend!


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