Smart Daily Currency Note | A day of two halves for sterling at the end of last week

Sterling

It was a day of two halves for sterling on Friday, remaining fairly range bound against most of its major peers until the early afternoon when increased levels of risk-aversion saw a significant shift in favour of the traditional safe haven currencies. Increasing concern that deficit-reduction talks are not doing enough to help stave off the current 'fiscal cliff' saw sterling lose substantial ground versus both the US dollar and Japanese yen; undoing much of its previous gains. News that GDP data had been revised down from 1 per cent to 0.9 per cent also helped contribute to sterling's poor performance. Friday also saw the release of better than expected current account data, while Public Sector Net Borrowing came out worse than previously forecast. As would be expected, this week sees very little news coming out of the UK, so call in now to see if Christmas cheer can help lift sterling.

Euro

Euro stayed fairly range bound against sterling on Friday; but fell by 0.5% against the US dollar. Little data was released across Europe, although German Consumer confidence came out slightly worse than forecast. The deputy prime minister also stated that Spain will struggle to meet its 2012 deficit target with its shrinking economy limiting the impact of budget cuts causing concerns for the currency. This week is very quiet on the euro front with little data released however, we will see French consumer spending as well as an Italian 10 year bond auction at the end of the week. Call now for the latest live rates.

US dollar

The US dollar was in full rebound mode on Friday, with concern that a deal would not be reached over the fiscal cliff affair driving traders back to the safe haven currencies of the US dollar and Japanese yen, driving the price up. It is, unsurprisingly, a quiet week for data, and as long as the political brinkmanship over the fiscal cliff continues we could see the dollar continue to strengthen as thin trading volumes make other currencies look an even riskier proposition. Aside from this, some data is released on Thursday; unemployment and consumer confidence data is usually very influential, and good results have the potential to bring risk appetite back to the markets, but only if the fiscal cliff has been avoided. Get in touch now to get the most up to date price.

Worldwide

Elsewhere it seems impossible to keep the Japanese yen out of the headlines, as once again it was one of the biggest movers of the day. A significant shift from global risk appetite to aversion saw the yen strengthen dramatically versus its UK and European counterparts. It was a very different story for the Canadian dollar, falling to a two week low versus its US partner, as news that plans to allow higher taxes had been scrapped decreased demand for the currency. Friday also saw the release of slower than anticipated CPI inflation, along with GDP data remaining flat at 0.1 per cent. The majority of data out this week focuses on Japan, with Monetary Policy Committee minutes and Tokyo Core CPI inflation data being the two most prominent releases. Call in now to see if the current trends continue, and to get a live price from your trader.