Sterling exchange rates gain against the Euro, US Dollar and Aussie Dollar

GBP EUR Exchange Rate: Weekly Review July 16  

On a day of very little data out for the UK apart from some retail sales first thing the pound has strengthened across the board. We have seen the pound move back up to a 4 month high against the Euro trading at around 1.2042. We have seen rates against the USD move above 1.56 again and further gains against the AUD now hovering around 1.58.

The rise in sterling exchange rates could be down to the expectation that the Bank of England will be raising interest rates at some point this year. More likely though is that it is down to Euro weakness with countries like Portugal and Spain coming back into headline news with their debt concerns. Portugal are holding a bond auction tomorrow to try and raise around 20 billion Euros but this may not squash the concerns that they will need assistance from the IMF. This could lead to further gains for the pound in the weeks ahead. I would not get to exited though as we will probably not see more than a 2-3 cent gain at tops.

The UK is still in a bad shape and against most other currencies I would be cautious as with the UK austerity measures kicking in over the coming months house prices and unemployment could be what drives sterling exchange rates for the next few months.  

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