Strong Q3 growth figures from China and encouraging news on eurozone manufacturing activity helped support risk appetite. This pushed the euro to six-and-the-half-month highs against sterling. Sterling continued to suffer losses after UK retail sales fell for the third consecutive month in September, while the euro reached new two-month highs against the Swiss franc after a survey from Credit Suisse and ZEW painted a concerning outlook for the Swiss economy. The US dollar, after coming back under selling pressure during the day, rebounded overnight.

Sterling

Sterling continued to tumble as the fall out spilled over and sent the UK currency to new 6 ½-month lows against the euro and eight-month lows against the Japanese yen. Minutes from the Bank of England’s MPC October meeting revealed that committee member Adam Posen voted for a £50 billion increase in quantitative easing. A slowing economy, severe public spending cuts and quantitative easing speculation are keeping sterling under significant pressure.

US Dollar

Overnight, US Federal Reserve member James Bullard recommended voting for $100 billion of new asset purchases at next month’s policy meeting. However, the US dollar reversed losses, particularly against the euro. G20 discussions are keeping investors cautious towards making further currency bets against the greenback and are leaning towards a stronger US dollar which would help rebalance currency markets.

Euro

Investors’ thirst for higher yields helped the euro jump as the single currency hit two-month highs against the Swiss franc, six-and-the-half-month highs against sterling and back towards recent eight-month highs against the US dollar. A flood of indices on key sectors of the eurozone economy also helped improve sentiment towards the euro area.

Japanese yen

G20 discussions are underway in South Korea and world leaders could possibly agree to discourage “competitive undervaluation” where countries weaken home currencies to boost exports. This is the likely reason why Japan is yet to re-enter currency markets to weaken the yen. As a result the Japanese currency rose to one-month highs against the Swiss franc and eight-month highs against sterling.

Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.