Sterling gives up gains as UK reels from London riots

9 August, 2011


The sickening events in London and elsewhere in the UK are doing nothing to help sterling, which has fallen back after gaining ground over the last week.

“Just a few days ago we were talking about sterling as a new safe haven but these riots taking place are another blemish that must have soured anyone’s taste for the currency,” said Neil Mellor, currency strategist at Bank of New York Mellon.

Meanwhile, factory output figures out this morning showed an unexpected fall in June, and the trade deficit hit its worst level since December, in a stark reminder that the UK economy is still failing to show significant signs of recovery.

While the well publicised debt crises in Europe and the USA have generally given better exchange rates for sending payments abroad in recent weeks, it can pay to remember that sterling is just as vulnerable to fall as any other currency at the present time.