UK pound is lower today as risk aversion sets in. Concerns about Europe are affecting the financial markets today, with banks retreating — and other stocks retreating as well. Even though the pound is lower against the dollar and yen on risk aversion, though, it is gaining against the euro.
Once again, Europe is the focus, as Spanish and Italian bond yields rise. Italy doesn’t look any closer to seeing a solution to its problems, and the eurozone leaders are likely to have to start thinking about Spain. And, of course, in the background is Greece. Many seem to have forgotten about Greece in favor of Italy, but there are still problems.
With risk aversion high, it is little surprise that the UK pound is down against the US dollar and the Japanese yen. Forex traders looking for safe haven will turn to those currencies, and away from high beta currencies. However, sterling is doing well against the euro. With all of the problems in the eurozone, it is little surprise that the pound is supported against the 17-nation currency. And, even with some of the economic risk in the UK, it is likely that pound will remain higher against euro for some time.
At 16:09 GMT GBP/USD is lower at 1.5910, down from the open at 1.6089. GBP/JPY is also lower, down to 122.4340 from the open at 124.3250. EUR/GBP is lower at 0.8574, down from the open at 0.8583.
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