British pound sterling: Currency holds ground vs EUR, advances vs USD as FTSE 100 enjoys gains

Last Updated on Tuesday, 10 January 2012 12:35 Written by Will Peters Tuesday, 10 January 2012 12:33

A stronger equity market performance has today sunk the US dollar on the currency markets.

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British Pound Sterling (GBP) in Euro (EUR): GBPEUR is 0.02% lower on the day at 1.2106 at 12:27 AM in London.

British Pound Sterling (GBP) in US Dollar (USD): GBPUSD is 0.06% higher at 1.5466.

With the FTSE 100 up by over a percent we have the stage set for a risk-on play on the global exchange rate markets.

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This has sent US dollar exchange rates broadly lower.

We would normally expect the pound euro exchange rate to follow suit, however, the GBP has managed to hold ground above the 1.21 level.

Helping the British pound was some good news showing that the UK retail sector is not in as bad a shape as had been initially expected.

The British Retail Consortium says UK retailers didn’t have as terrible a Christmas as they had been expecting.

According to a survey by the organisation, UK retail sales in December were 2.2% higher than this time last year, when sales had dropped by 0.3%

Also providing domestic support was news that house prices fell at a marginally slower pace in the three months to December against a backdrop of steady demand and a modest rise in the number of properties coming on to the market, a survey showed on Tuesday.

The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance rose to -16 last month from -17 in November, the highest level since June 2010 and confounding economists' forecasts of a further decline to -19.

London remained an outlier, with broad-based price rises.

That said, in terms of the pound euro rate, it is likely to be the euro that decided direction.

Currency players will as always be keeping an eye on developments in the Eurozone.