Great Britain pound may be down against the US dollar today, and down against the Japanese yen, but it is up against the euro. Sterling is lower against the dollar and yen on risk aversion, but, in terms of European currencies, it appears to be taking the safe haven designation.
As Europe’s troubles cause more unease amongst Forex traders, and as concerns about what’s next for Asia (especially China) weigh on hopes for the global economy, high beta currencies are heading lower. Forex traders are looking for safety and stability, and that means the US dollar and the Japanese yen.
However, when the pound is compared to other European currencies, it’s doing better. Britain’s fundamentals have more going for them than the eurozone’s. Even though Britain has been struggling with its own budget issues, it has managed to implement austerity measures, and it still expanded at 0.5% in 2011 Quarter 3, as opposed to the eurozone’s 0.2% expansion.
Sterling is also beating the Swiss franc, since there is concern that intervention will weaken the franc; the SNB has shown that it’s not afraid to deliberately sink the value of the franc. With the SNB trying to move the franc away from safe haven status in recent years, it appears as though the pound may be poised to step in.
At 14:52 GMT, GBP/USD is lower at 1.5489, down from the open at 1.5525. GBP/JPY is also lower, dropping to 119.4855 from the open at 120.0150. EUR/GBP is higher at 0.8604, but the pound is strengthening.
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