Sterling hit the highest level against the euro since January 2011, breaking through €1.20/£1 and hitting a high of €1.2043/£1 as strong demand for lending from the ECB failed to alleviate concerns over the European debt crisis. Despite sterling’s strength against the euro, the Bank of England minutes were pretty downbeat with policymakers mulling over further Quantitative Easing in February but this had little impact on the pound. Call in now for a live exchange rate as last year when it hit €1.20 it dropped off for the rest of the year.

In the euro zone, in the first ever offer of cheap 3 year loans by the ECB, banks snapped up €490bn of the funds on offer suggesting that the banking system in the region is heading for an impending funding squeeze. One trader compared the lending as papering over the cracks of a crumbling house. Sterling is expected to move towards €1.25 in the coming months and with total funding requirements in 2012 for sovereign debt sitting at over €1 trillion, this is unsurprising. Call in now for a live exchange rate.

In the USA, it was a relatively quiet day for data in the USA, with the major action taking place in Europe with the ECB funds issue. Initially there was a boost to risk appetite from the uptake which saw the US dollar weaken off. However, as markets began to realise the implication of such an oversubscribed take up, risk appetite reversed and the US dollar strengthened. Call in now for a live exchange rate.

Elsewhere, the Canadian dollar stayed pretty flat despite retail sales figures coming in higher than expected. As data starts to thin out ahead of Christmas, ensure you don’t get caught out by any volatility.

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