Showing posts from July, 2009

Sterling 1 month high against Euro

Sterling's gains...
We have seen a good run for the pound all week, and this morning rates seem stable. At 08:30am rates are as follows:
GBP/EUR 1.1724GBP/USD 1.6558GBP/NZD 2.5227GBP/AUD 1.9980GPP/CAD 1.7874GBP/CHF 1.7972GBP/ZAR 12.834GBP/JPY 158.21The pound is at 1 month highs against the Euro and US Dollar, and not far away from the highest rate all year. The rise is after data showing rising UK house prices suggested property prices have stabilised from a steep fall, as outlined in yesterdays report.

Broad losses in the dollar also helped to prop up sterling, which recovered from two days of losses as a rise in UK share prices helped to stoke demand for currencies considered to be higher-risk.

It recovered from losses over the past two days when a pause in risk demand had stung the currency. Despite Thursday's gains, sterling is on track to end the month more or less flat against the dollar and the euro, and some analysts are sceptical about whether the UK currency will signifi…

Sterling pushes higher, but may not last

Sterling July 2009
The pound has pushed much higher this morning following corporate earnings data yesterday, and better than expected house price information for the UK early this morning. As you can see from the snapshot below of rates at 08:30am, we have significantly better levels than yesterday:

GBPEUR 1.1710
GBPUSD 1.6467
GBPNZD 2.5220
GBPAUD 2.0041
GBPCAD 1.7877
GBPCHF 1.7901
GBPZAR 12.892
GBPJPY 156.15

House Prices
The UK's largest building society believes there is a reasonable chance that house prices could end the year higher than they started 2009.

Such an outcome was unthinkable a few months ago, the Nationwide's chief economist said.
The Nationwide's latest house price survey showed prices rose by 1.3% in July compared with the previous month. The result was alot better than anaylsts predictions, meaning it has helped push the pound through 1.17 against the Euro.

Another reason for the rise is German consumer prices - they fell for the first time in 22 years in J…

Pound falls. Lots of UK data today

Market Snapshot, 30 July 2009 @ 08:30am :
GBPEUR 1.1560GBPUSD 1.6375GBPNZD 2.4932GBPAUD 1.9950GBPCAD 1.7778GBPCHF 1.7596GBPZAR 12.924GBPJPY 153.91Trading Yesterday:Sterling fell yesterday, retreating from earlier gains made earlier this week against both EUR and USD. It was as Britain's main stock index turned negative and data showed UK retail sales fell faster than expected in July that caused the fall.Adarsh Sinha, a currency analyst at Barclays Capital said the pound slipped in line with equities but was more generally struggling to keep in step with gains in other pro-cyclical units following a strong performance earlier in the summer."Sterling has sort of been underperforming the other more risky currencies in general," he said. "What really matters for sterling is what happens in banking stocks."The currency edged down a touch after data from the Confederation of British Industry showing British retail sales fell faster than expected in July but slower t…

Pound makes gains against Euro and USD

Sterling (GBP) to Euro (EUR)
Sterling edged up against the Euro yesterday as confidence in the strength of corporate earnings continued to support world equities and helped Sterling recover losses after poor growth data on Friday.

Some analysts said the healthy run in the pound against the dollar and euro, largely motivated by the currency's cheapness after long declines during the credit crunch, was showing signs of vulnerability, which is due to concerns about the UK government's weak fiscal position.

Minutes from the Bank of Englands July meeting released last Wednesday signalling muted optimism about Britain's economic prospects provided the impulse for sterling buying.

But Friday's UK GDP data suggested recovery could be slower than previously thought and added fuel to speculation over new stimulus measures from the Bank of England, which has already embarked on a 125 billion pound quantitative easing programme - this is what's the main cause of the volatility in …

Outlook for the pound against Euro and Aussie

Welcome back to regular readers, as daily posts from FCG now continue as normal. Today we'll have a quick look at the pound and where things lie after poor GDP data last week, and also the data releases from Australia that are due this week.

Sterling and UK Economy
Sterling fell against both the US Dollar and Euro on Friday, as UK GDP growth figures for the second quarter came in weaker than expected, dampening hopes for a quick economic rebound while global stock market falls added to the downward pressure on sterling.

While an improvement on the previous quarter, the figures may indicate that the recovery could take longer than previously had been thought. The contraction was much less than the 2.4% seen in the first quarter but was still above analysts' 0.3% prediction. The latest figures take the annual rate of decline to 5.6%, the biggest fall since records began in 1955.

The data suggested recovery could be slower than previously thought and added fuel to speculation over…

Sterling remains under pressure

The pound remains under pressure this morning, and GBP/EUR has dropped into the 1.15's. There was very little data yesterday, so the main reasons for the fall are likely to be the poor unemployment figures released on Wednesday:

Market Snapshot @ 08:30am
GBPEUR 1.1584GBPUSD 1.6320GBPAUD 2.0406GBPNZD 2.5309GBPZAR 13.268GBPJPY 152.78This week's IMF report was also of importance, as they warned that the pound could be at risk from uncertainty and urged Prime Minister gordon Brown to set out a clear path for reducing national debt.

The International Monetary Fund has delivered its sharpest rebuke yet on the ‘dramatic deterioration’ in Britain’s public finances. In a major blow to Gordon Brown, the Washington-based fund warned the UK is ‘testing the limit of the market’s confidence’ by pushing the national debt towards 100 per cent of gross domestic product - or close to £1.5trillion.

If Britain does not do more to tackle public spending, faith in the Government’s ‘solvency’ could…

Unemployment & Exchange Rates

The main events yesterday were the UK unemployment figures, which we will look at today. First let's have a quick look at where rates stand right now:

Market Snapshot @ 08:30am:
GBPEUR 1.1625GBPUSD 1.6385GBPNZD 2.5557GBPAUD 2.0509GBPCAD 1.8320GBPCHF 1.7626GBPZAR 13.327Yesterdays Trading First at 09:30am yesterday, we saw the number of people claiming unemployment benefit increased by 23,800 in June to 1.56 million, which was actually less than analysts had forecast.
As the figures were better than expected, we saw a slight surge in the pound, pushing GBP/EUR up to around 1.1685.
The rise was short lived however, when the Office for National Statistics released further data that showed UK unemployment rose by a record 281,000 to 2.38 million in the three months to May. This means that the jobless rate has now increased to 7.6%, the highest in more than 10 years.

TUC general secretary Brendan Barber said "It's particularly worrying that over half a million unemployed people ha…

Pound Remains under Pressure

Yesterdays Trading
Sterling extended gains against the euro yesterday in early trading, hitting the day's high after Bank of England policymaker Adam Posen said he expected the UK currency to trade higher against the euro in the medium term. His comments caused some short term strength for the pound.

Sterling however trimmed gains against most currencies alter in the day, including the Euro and the US Dollar after data showed that annual UK consumer price inflation fell below the Bank of England's 2 percent target, suggesting that price risks continue to recede as the economy remains weak.

The Office for National Statistics said UK consumer prices rose 0.3 percent on the month in June, taking the annual rate to 1.8 percent, the lowest since September 2007, from 2.2 percent in May.

Today we have several data releases for the UK at 09:30am; Claimant Count, Average Earnings, Unemployment Rate & Jobless Claims. The unemployment rate will have the most impact, and we expect th …

Outlook for Sterling Exchange Rates

As against most other major currencies, Sterling weakened against the Euro in the early stages of last week, with the GBP/EUR rate trading at a low of 1.1528 on Wednesday.

Positive sentiment towards the Eurozone economy and Euro were boosted by better than expected data from its largest economy; German manufacturing output rose by the most in almost two years in May, whilst industrial production also increased at its fastest pace in nearly sixteen years.

In an absence of any further Eurozone economic data, there was little in the way of Euro momentum over the remainder of the week to direct the GBP/EUR rate. Renewed concerns over the health of the Eastern European economies coincided with Sterling strength, as the Bank of England (BoE) left interest rates unchanged at 0.5% and decided not to expand its £125 billion quantitative easing (QE) stimulus programme, enabling the Pound to move above the €1.17 level early on Friday.

However Sterling was unable to hold on to these gains after c…

Pound gains against USD & EUR

Sterling Gains
Yesterday we saw the pound make significant gainst against both the single currency and the US Dollar. We'll take a look now at what caused the rise, and where rates may head in the coming months.

The pound jumped against the dollar and euro yesterday after the Bank of England left its quantitative easing target unchanged, surprising markets which had expected the central bank to expand its asset buying scheme.

I and many others thought that they would raise the total funds to pump into the economy by 25 billion pounds, which would have allowed the central bank to pump money into the economy until August when it publishes new quarterly economic forecasts.

However, there was no expansion of the programme of 'printing' new money to boost the economy. The markets move as much on rumour as fact, and because further money was expected to be created, this is what has weakened the pound this week. When it was clear there would be no expansion, we immediatley saw St…

Sterling remains on back foot.

Rates as at 08:30am
GBPEUR 1.1561
GBPUSD 1.6104
GBPAUD 2.0579
GBPNZD 2.5545
GBPCAD 1.8701
GBPZAR 13.0682

Yesterdays Trading
Sterling extended losses yesterday, hitting a 1 month low against the US dollar and the Euro after weak UK manufacturing output data on Tuesday further clouded optimism that the economy may be improving.

Brushing off figures on Wednesday showing a rise in British consumer confidence, the UK currency continued to smart from Tuesday's unexpected fall in output, and was on track to post its fifth straight day of losses.

Data yesterday also showed a slight fall in UK house prices in June, but they had limited impact on the market as their reversal from a jump the previous month was muted.

"The overriding theme in the next few weeks will be a fear of asset capitulation that will dominate in the short term," said Neil Jones, head of European hedge fund sales at Mizuho in London.

"As a result, sterling will have more downward momentum," he said, adding that…

Sterling remains weak following poor data

Sterling's Weakness against the Euro
Sterling fell across the board yesterday, hitting a 1 month low against the EUR after weak UK industrial production data fanned further doubts that the economy is in for a quick recovery.

The news dashed hopes that the economy may have rebounded in the second quarter after it suffering its steepest fall in 50 years during the first three months of the year. The news halted the rise of the pound we have seen up until the start of July.

There are also concerns that the Bank of England will expand its quantitative easing programme when it announces its latest policy decision tomorrow. Last month the headlines proclaimed an end to the recession after growth returned in April. However, figures show that the UK economy is stagnating rather than continuing to contract at a sharp pace.

Bank of Scotland Treasury currency strategist Naeem Wahid said : "Sterling is one of the weakest currencies out there. This data has wiped out some of the signs of reco…

Sterling Euro 2009 Predictions

Sterling hit a 1 month low against the US Dollar yesterday as traders continued to dump the pound on the back of last week's dismal U.S. payrolls figures, which cast doubt about an improvement in the global economy. We'll see below that there are forecasts that the worst is over, however the markets are remaining cautious and awaiting actual data rather than forecasts.

Worst of Recession Over?
The worst of the UK's recession is over, according to the British Chambers of Commerce (BCC) business group, but talk of a recovery is premature.

Its report, based on a survey of 5,600 companies, found there had been "welcome progress" in confidence levels between April and June. It's not all good news however, as predictions continue that unemployment will reach 3.2 million by the middle of 2010. It warned that the increase in confidence was fragile.

Last week, the Office for National Statistics sharply revised its GDP data for the UK, saying the economy shrank by 2.4% …

Sterling falls against USD and EUR

Last Weeks Trading
The pound steadied on Friday as speculative traders took some profits following its losses on Thursday when dismal US non farm payrolls increased risk aversion and pushed the pound to a 1 week low versus the USD.

After the much anticipated employment figures and an interest rate meeting by the European Central Bank on Thursday, the U.S. markets were closed for the Independence Day holiday. Trade was thin therefore on Friday.

The pound offered little reaction to data showing a slight fall in activity in the UK services sector, as the figure remained in growth. Sterling, as is often the case, was driven by moves in the US.

This Week
This morning, the pound has started to tumble. Sterling to US Dollar has already plummeted, and rates for Euro are also much lower than Friday.

Cable is falling strongly against Dollar in the early European morning and the pair has fallen around 200 pips in the last two hours from 1.6330 to trade close to 1.6130 and to post 3-week low at 1.613…

Sterling recovers against Euro

Rates as of 08:35am:

GBP/EUR 1.1706
GBP/USD 1.6404
GBP/AUD 2.0524
GBP/NZD 2.5887
GBP/CAD 1.9002
GBP/CHF 1.7777
GBP/JPY 1.5743

Sterling to Euro
Yesterday the pound made slow gains throughout the day, recovering a cent against the Euro to close at around 1.17. The main news of yesterday was the ECB decision to hold rates at 1%, which was widely expected. At a news conference, ECB president Jean-Claude Trichet predicted that falling prices would be "short-lived".

Eurozone consumer price inflation was negative in June for the first time. Mr Trichet also said the ECB's plan to buy 60bn euros of company bonds would begin on 6 July and promised more details later. It was these comments that weakened the Euro and caused rates to climb back throughout the day. The fact that more money will be pumped into the EU economy is taken as a sign of continued problems in the EU.

Last week, he described the eurozone economy as being in "uncharted waters", and the ECB offered 442bn euros …

Pound Sterling drops against Euro.

Market Snapshot:

GBP/EUR 1.1605GBP/USD 1.6357GBP/AUD 2.0394GBP/NZD 2.5713GBP/CAD 1.8801GBP/CHF 1.7658GBP/JPY 1.5820
These are the live interbank rates as of 08:49am BST.

Yesterdays Trading
We saw rates from the pound to the Euro fall to the low 1.16's. The main cause of the drop was German Retail Sales figures. They were a little better than expected, which strenghtened the Euro and caused rates to fall.

The US Dollar actually fell yesterday also, following the ADP employment report. The numbers were weaker than expected.

UK Economy
Earlier this week, we saw very weak GDP figures which weakened the pound significantly. there had been renewed confidence in the economy, however the figrues dented that confidence.

However, we have seen that UK manufacturing activity shrank at its slowest pace for a year adding to hopes that the worst of the downturn is over.

The Purchasing Managers' Index from the Chartered Institute of Purchasing and Supply (CIPS) said the pace of decline in new orders c…

Sterling to Euro Prediction 2009

Sterling falls against Euro
Today marks the beginning of Quarter 3, and has started badly for the pound. Sterling rates for buying US Dollars hit an 8 month high, however against the Euro rates have fallen after gains were short lived following poor UK economic data.

Sterling had posted hefty gains during the second quarter due to escalating speculation that the deterioration in the UK economy seen from a year ago may have hit a bottom, and is showing some signs of improvement. This however appears not to be the cast, as we'll see below.

Today we'll look at GBP/USD and the state of UK house prices. Then we'll have a look at the poor GDP data that's caused rates to fall. Finally, a quick look at GBP/EUR forecasts, and then of course today's data releases will be listed as usual.

Sterling (GBP) to US Dollar (USD)
Sterling hit an 8 month high against a much weaker dollar yesterday due to surprisingly strong house prices. Gains were trimmed however, after weak gross domes…