Sterling jumped by 0.8% against the US dollar yesterday after co-ordinated emergency action by several central banks saw risk appetite jump and investors return to riskier assets. The Federal Reserve, European Central Bank, Bank of England and central banks of Canada, Japan and Switzerland agreed to cut the cost of US dollar swaps to help boost liquidity and help European banks hurt by the euro zone crisis. Despite the gloomy outlook outlined in Tuesday’s autumn statement, sterling rallied against the US dollar, but slipped against ‘riskier’ currencies as investors felt happier taking risks. Out later today there is manufacturing activity data which will be key in painting a picture of the UK recovery. Call in now for a live exchange rate.

In the euro zone, the euro surged against the US dollar on the news of the co-ordinated action, in essence a huge injection of Quantitative Easing on a global scale. Liquidity – or the availability of borrowing – has been squeezed by the escalation of the European debt crisis. The measures are in no way a solution to the crisis and the euro faces a make or break 10 days. With rumours circulating of firms implementing assessments of the impact of a euro break up, European policymakers have until the December 9th summit to deliver an effective solution that delivers a long term fix to the problems. Call in now for a live exchange rate.

In the USA, the US dollar weakened off against most of its major counterparts as the measures were announced. With cheaper US dollars now widely available, investors took advantage and bought into higher yielding ‘commodity backed’ currencies. Aside from this, there was some surprisingly positive data released in the US yesterday that showed that US private sector jobs increased by 206,000 in the previous month. Business activity data jumped and US pending home sales jumped by 10% in October. Combined with last week’s strong retail sales, the figures painted a much better than expected picture of the US recovery than many had thought. Call in now for a live exchange rate.

Elsewhere, commodity currencies surged as investors took advantage of increased risk appetite. The South African rand jumped by over 2% against the US dollar and the Australian dollar made similar gains. If you are moving those currencies into sterling, now is a great time so call in now to take advantage.

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