Risk identified in currency exchange levels

The currency exchange rate of sterling and the euro are susceptible to risk.

This is according to a recent report conducted by HSBC.

The Global Investment Perspective study found that sterling is susceptible to event risk as the government struggles with the budget deficit.

However, the euro was identified as having the possibility of delivering both "positive and negative surprises", depending on how the fiscal debt issues play out.

Portugal, Italy, Greece and Spain, known as the PIGS, are the main areas of concern when it comes to national debt problems within the eurozone.

Simona Paravani commented on the state of currency trading: "In regards to major developed currencies, it is likely that heightened volatility will continue."

This morning (August 5th) sterling was trading against the US dollar at $1.588 at 11:15 BST.

However, analysts have suggested that the pound may struggle to break through the currency exchange rate of $1.60.

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Posted by Chris Smith