Pound Gains on Euro, Dollar
The pound is at a one month high vs. the euro as European Union Finance Ministers delivered a stern message to Greece and the ZEW Center for European Economic Research posted worse than expected investor sentiment results. At the present time Greece’s debt accounts for more than 120% of its GDP and has triggered several credit downgrades. Greg Gibbs of RBS stated, “The problems in Greece will be much harder for the market to gloss over this year, and there is not a solution which appears good for the euro.” The pound gained as much as 1% vs. the euro trading at 87.15 pence its highest level since September 2009. Against the dollar the euro was down 0.9% at $1.4258. The pound gained 0.2% against the dollar and traded at $1.6379 after hitting a high of $1.6458.
Loonie and Aussie Fall
The dollar gained 0.7% against the Canadian dollar after the Bank of Canada lowered its growth outlook, kept interest rates steady and said a strong currency poses a risk to the nation’s recovery. The Aussie dollar fell after China’s central bank ramped up efforts to tighten liquidity. Australia is a chief supplier of iron ore and coal to China and any slowdown in Chinese growth is likely to hurt the Aussie. The Chinese actions dampened risk appetite and bolstered the US dollar against the yen and high yielding currencies.
Pound Boosted by Cadbury Sale
The pound was boosted by a 2.9 year on year increase in consumer prices in December. The Bank of England left rates at a record low of 0.5%. BOE Governor Mervyn King is expected to deliver a speech today in Exeter, England. Ronald Leven of Morgan Stanley in New York stated, “The high inflation is creating an impression the Bank of England is potentially going to move more quickly. The market’s going to pay a lot of attention to King’s speech today. We’re starting to see more enthusiasm in the market to be long sterling.” The pound also gained on the news that Cadbury Plc agreed to a 11.9 billion-pound ($19.7 billion USD) offer from US based Kraft Foods Inc.
