Sterling Lower as Risk Aversion Sets In

Great Britain pound is struggling today, after seeing some gains yesterday. Today, though, equities are weighing on sterling as fears about the eurozone mount and result in risk aversion.

The latest trigger in the sovereign debt drama is Italy’s bond yield. With the 10-year-bond yield beyond seven percent, it is little surprise that risk aversion is the name of the game today. Concerns still remain, in the background, about Greece, and it looks like Spain or Portugal could be the next problem for the eurozone. But, for now, most of the focus is on Italy.

Due to British banks’ exposure to eurozone debt, it is not surprising that this concern is affecting the pound. On top of that, the pound is sensitive to what is happening with equities. With equities lower in Europe, and with US stock futures pointing to a much lower open (Dow futures are down more than 200 points), it is little surprise that risk aversion is providing help for the US dollar.

Sterling is higher, though, against the euro. This isn’t much of a surprise, either, since it is the eurozone having all of these problems. Euro could very well be weak for some time.

At 12:51 GMT GBP/USD is down to 1.5977, lower than the open at 1.6089. EUR/GBP is lower at 0.8536, down from the open at 0.8598. GBP/JPY is down to 124.1790, from the open at 125.0650.

If you have any questions, comments or opinions regarding the Great Britain Pound,
feel free to post them using the commentary form below.