The pound to dollar exchange rate is 0.382% higher on the day with GBP to USD at 1.6282. The pound to euro exchange rate is 0.608% higher with GBP to EUR at 1.1438. While the pound has made gains against the euro on the back of volatile market conditions, the same cannot be said about the pound vs US dollar. The reason is because the US dollar sits above the pound on the scale of safe haven currencies. While both sit above the euro, the US dollar still holds sway over the British Pound courtesy of its vastness and global currency status. Things were going well for the pound vs the dollar two weeks ago the US dollar was hit by inaction amongst US politicians over the US debt ceiling. When a deal was finally reached the US dollar benefited, as was predicted by many exchange rate analysts. "The difficulty in reaching a deal was bad news, and stock markets embarked on a punishing sell off that has wiped trillions of dollars off global markets," says Adam Solomon at Tor Fx. Looking elsewhere we see the pound euro exchange rate is still holding ground. With the Eurozone barely expanding, we suspect that markets will begin stressing over the EU long term prospects and watch for the EUR to come under pressure and safe haven trades to come back in fashion. EU remains vulnerable, as sovereign bond spreads and CDS remain elevated, and the political environment divided. The ECB has stepped into the secondary bond markets by buying peripheral bonds, providing unlimited access to liquidity. If the SNB wishes to the keep the CHF weaker against the Euro, then the SNB will need to be ready with more than just some balance sheet sleight of hand and safe liquidity operations. If the SNB is truly wants to protect the exchange rate against an ailing Euro, they’re going to need the “Henry Paulson ‘bazooka in my pocket’.

Source