by Adam Solomon
Sterling / Euro and US Dollar exchange rates
The Pound weakened against the U.S Dollar and the Japanese Yen overnight as Asian stocks markets slumped following reports that Standard Poor’s cut New Zealand’s credit rating, adding to concern that borrowing costs will increase over the coming months. The UK currency also fell back towards 1.55 against the U.S Dollar, amid reports that Chinese manufacturing declined for a third straight month and German retails fell more than initial forecasts.
The Stoxx Europe 600 Index of shares slipped 0.9% in early trading, while the FTSE 100 Index dropped 1%, weakening demand for the higher-yielding currencies even more, as the Australian Dollar also traded at 1.60 versus the Pound.
Nevertheless, the Pound continues to trend higher versus the Euro, despite speculation that the Bank of England will implement additional quantitative easing measures as early as next Thursday. The focus seems to be fixed on the problems associated with sovereign debt in the Euro-zone and the underlying threat of a Greek default.