Sterling plays piggy in the middle leaving UK businesses in limbo

The pound is playing piggy in the middle between a falling US dollar and surging Euro leaving British importers and exporters in limbo.

GBP/USD is currently trading at 1.6060, the highest level we've seen since early February this year.  The Dollar remains under pressure amid continued concerns as to the state of the US economy and the prospect of further QE over there. Meanwhile, the Euro continues to surge forward as investors shed earlier concerns about Public Sector debt - particularly  in Greece, Italy and Ireland  while the key economies of Germany and France continue to flourish. Currently EUR/USD is trading above 1.4100 - also an eight month high.

Jason Gaywood, Senior FX Consultant at HiFX comments: "Against this backdrop, Sterling very much finds itself as piggy in the middle - strengthening against the Greenback, but weakening against the Euro. Over the last two months, Sterling has weakened by as much as 8% against the unified currency (Euro), yet its relative strength against the USD has gone up by 4.5% over the same period.

There is little to currently suggest anything other than a broad continuation of these themes with GBP/USD likely to test up towards 1.6500 and GBP/EUR down towards 1.1000 in the coming weeks. This leaves British businesses in limbo with Sterling being simply a passenger in these moves as traders focus on the respective merits of the US and Eurozone economies. We will have to sit tight and await a clearer indication as to where the UK economy is heading before Sterling can play a more influential role in its own fate."