Sterling Euro Exchange Rates Gain

GBPEUR
Yesterday the EU revised their GDP figures, and this shows that the economy shrank in 2008 more than originally thought. Despite the bad news about UK condfidence yesterday (see below) GBPEUR rates have climbed due to the weaker Euro following the news.

"Worryingly it is far from inconceivable that EU GDP contraction was deeper in the first quarter of 2009, given the largely dire data and survey evidence," said Howard Archer an economist. "This will hopefully have marked the low point in the downturn, although recovery currently still looks some way away, " he added.

In my opinion this spike in rates may well be short lived, as tomorrow we have lots of very important data from the UK that is likely to be fairly poor. The pound is still very weak, and remember it is the weak Euro thats pushing rates up rather than any strength in Sterling. This is made clear when you see other Sterling Exchange rates such as GBPUSD falling away yesterday.

UK Consumer Confidence
As breifly mentioned in yesterdays report, the main data of note for the UK yesterday was the Nationwide Consumer Confidence survey. The results show that confidence fell in March as peoples worries continued about jobs. They are right to be, as UK unemployment recently hit two million for the first time since '97. Most forecasts are saying the figure will reach as high as 3 million by this time next year. This weakened the pound, and caused rates against most currencies to drop away. The exception was the Euro, which as outlined above climbed due to poor EU data.

IMF Creates more of its own currency.
Much was made during the G20 of Chinas push to stop the USD being the reserve currency. I breifly touched on this at the end of March.

Special Drawing Rights (SDRs) are used as a unit of account by the IMF and several other international organisations. Effectivly its the IMF's own currency. A few countries peg their currencies against SDRs, and it is also used to denominate some private international financial instruments. Its based on the USD, JPY, EUR and GBP. Click here for a simple explanation.

The G20 agreed to up the supply of SDRs by $250 billion to help poorer nations. This is what China was (sort of) pushing for. its been reported than some EU countries in particluar Germany is very unhappy with this, and feel that all it will do is cause massive inflation after the recession is over.

I mirror those converns - China, UK, USA and Japan and now the IMF have all been creating billions of dollars from nowhere. This will come back to bite in the future, as this may well cause a big devaluation of world currencies. Watch this space.

Todays data
The only data of note from the UK today is the British Retail Consortiums Shop Price index, which measures price changes in the popular retail outlets in the UK.

We have some factory order data and trade balance data from Germany. As this country is the largest economy in the EU, data from there can have an effect on the value of the Euro.

We have some mortgage and housing data from Canada and the USA, but the most important data from across the pond is the FOMC minutes. The Federal Open Market Committee organises eight meetings each year and reviews economic and financial conditions.

The minutes are important as it can signal the stance of monetary policy and assesses price stability and sustainable economic growth. It is a clear indicator of future interest rate movements. GBP/USD has recently gone up almost 8%, after dropping again yesterday following poor UK data.

If you are looking to make a transfer abroad, and would like to find out more about Foremost Currency Group, then simply click on the link below to visit our main site.

Please quote 'Blog' when you call to recieve preferential exchange rates.

Just got a question? Click Here to Send me an Email

Foremost Currency Group