The pound has risen to multi month highs today against several of the key currencies, despite the UK being in recession.
The continuing troubles in the Eurozone and the softening of the US dollar have made the pound an attractive safe haven for an investor which is either a sign that confidence remains strong in the UK economy or that the Euro and dollar situation is worse than expected.
Against the dollar the pound has reached a 7 month high and shows no sign of slowing down. The pound broke through the important 1.6170 level and it is thought that the currency will reach the 1.6450 level over the next few days. In comparison the dollar slumped against many basket currencies.
The pound continues to do well against the Euro and has reached a 20 month high against the troubled currency, trading at the 1.2275 level. The Euro itself has slipped again to a 22 month low thanks to the continuing uncertainty in the Eurozone countries.
The situation in Spain continues to deteriorate with the country officially re-entering recession and with several of the country’s banks having their credit rating reduced by the Credit ratings agency Moody’s. Two of them have been reduced to junk status with the big players, Banca Civica and Santander receiving status reductions. In Santander’s case its rating was cut by two points from A+ to A-.
This makes the banks rating higher than that of the country’s which was reduced to BBB+ last week.
The pounds next target against the Euro is the former high of 80.67 pence in June 2010. If it pushes beyond that level then it will have reached levels not seen since the autumn of 2008
The Pound to Euro exchange rate is currently trading at 1.227
The Pound to US Dollar exchange rate is currently trading at 1.625
The Euro to US Dollar exchange rate is currently trading at 1.323
The Euro to Pound exchange rate is currently trading at 0.814