Showing posts from August, 2009

Pound falls for 7ths straight day

Pound to Euro is on its longest losing streak since January - 7 straight days of decline, while sterling/dollar is firmly on track for its steepest monthly decline this year. It's fallen more than 3 percent so far in August. Pound rates have not fared well this week. At the time of writing rates are as follows:
GBP/EUR 1.1354GBP/USD 1.6274GBP/AUD 1.9360GBP/NZD 2.3737GBP/CAD 1.7702GBP/CHF 1.7265GBP/ZAR 12.672GBP/JPY 152.63Sterlings DeclineSterling hit a 2 1/2-month low against the euro on Thursday after data showed UK business investment fell by the most in almost a quarter of a century, reinforcing expectations interest rates will stay low for some time.These reports offset surprisingly strong UK house price data and kept the idea of low Bank of England and market-based interest rates, which diminish the relative appeal of sterling-denominated assets, at the forefront of traders' minds.As outlined in yesterdays report, it's this prediction of continued low rates in the UK,…

Interest Rate expectations hurt the pound

The pound continued to fall throughout trading yesterday, after government bond yeilds fell, and also interest rate differentials caused the Euro to gain against the pound. Rates at 08:30am 27th August are as follows:
GBP/EUR 1.1369GBP/USD 1.6210GBP/AUD 1.9542GBP/NZD 2.3814GBP/CAD 1.7805GBP/CHF 1.7305GBP/ZAR 12.706GBP/JPY 151.61The pounds continued weakness
Sterling hit a near 3 month low against the Euro yesterday after the yield on 2 year UK government bonds fell to a record low. This makes short-dated British debt less attractive than its euro zone counterpart.

Also, lower short-term UK yields hurt the pound across the board, pushing it to a 6 week low against the US Dollar. We also saw a strong reading of German Ifo business sentiment, and this boosted the euro against sterling, compounding the problem and causing rates to fall into the mid 1.13's.

"When the BoE is so cautious about keeping rates low and the Ifo is so positive, it's hard not to push Pound Euro rates lo…

Pound continues to fall

Pound continues to fall
Sterling hit a 2 1/2-month low against the euro on Wednesday as investors continued to dump the UK currency after the yield on the two-year gilt hit its lowest level ever.

Asian markets appreciated this morning on the back of the second consecutive increase on U.S. housing prices and consumer confidence. The Euro has remained rangebound, while the Pound declined further. This has caused Sterling exchange rates to continue the recent downward trend. Rates at 08:30am 26th August are as follows:
GBP/EUR 1.1397GBP/USD 1.6328GBP/AUD 1.9484GBP/NZD 2.3708GBP/CHF 1.7313GBP/CAD 1.7731GBP/ZAR 12.668Sterlings Weakness
Sterling hit its lowest mark in two-and-a-half months against the euro yesterday as interest rate and bond yield spreads moved against it, and lost ground against the dollar despite equities recouping earlier losses.

The news was concentrating on the fact that British mortgage data on Tuesday showed that mortgage approvals in July jumped to their highest in 17 mo…

Sterlng Euro & Sterling Dollar September 2009

Sterling Falls
Sterling fell to its lowest level against the euro in two and a half months on Tuesday, as a bout of weakness in global equities helped darken the pound's near-term technical outlook. Today we'll focus on Sterling rates to Euro, US Dollar, and Aussie Dollar. First we'll have a quick look at how low rates have dropped:
GBPEUR 1.1463GBPUSD 1.6364GBPAUD 1.9558GBPNZD 2.3876GBPCAD 1.7635GBPCHF 1.7378GBPZAR 12.775GBPJPY 154.03EUR
Sterling fell away last week and again slipped further on Monday, hovering around its lowest level against the Euro in over a month. The fall was attributed predominantly to the comments that UK interest rates will stay low as the economy struggles, while strong Euro data boosted optimism about the pace of the Eurozone’s recovery.

The Pound slipped towards the 87 pence level against the single currency in the aftermath of strong European purchasing managers' indices last week. Also last week, Bank of England policy meeting minutes showed…

Sterling Outlook August/September 2009

Good Morning, & welcome to a new week. Today we'll have a quick look at where rates stand, some news about an end to the recession, a quick review of last weeks trading and the future for Sterling. Finally as usual for a Monday, we'll have a detailed look at the weeks data. So, pound rates as at 08:30am 24/08/09:

GBP/EUR 1.1518GBP/USD 1.6473GBP/AUD 1.9653GBP/NZD 2.4117GBP/JPY 156.34GBP/ZAR 12.796GBP/CHF 1.7487GBP/CAD 1.7798Recession to end?
Confidence among business professionals has seen the biggest rise for two years, suggesting the UK recession is at an end, a survey has said. The Institute of Chartered Accountants' index of business confidence rose to 4.8 in June, from -28.2 in March.

However, chief executive Michael Izza warned against underestimating the challenges ahead for businesses. The institute predicts the UK economy will grow by 0.5% in the third quarter. Its forecast comes after the economy shrank by 0.8% in the second quarter of the year. However, mar…

Sterling Euro Outlook 21st August 2009

Pound Rates 21/08/09:
GBP/EUR 1.1540GBP/USD 1.6490GPP/AUD 1.9836GBP/NZD 2.4335GBP/CAD 1.7887GBP/JPY 1.5489GBP/ZAR 12.952
Pound falls on weak UK finances
Sterling fell broadly on Thursday, dented by figures showing an unexpectedly sharp deterioration in the UK public finances. The borrowing figures showed a record deficit for the month of July, which is the first time government accounts have been in the red in that month since 1996. Rates for Euro have dropped back into the 1.15's this morning.

The pound had initially risen on news that British retail sales rose 0.4 % in July - double the expected, but quickly erased those gains and turned lower as attention switched to concerns over the UK's parlous fiscal situation. I briefly touched on this in yesterdays report, as it's our finances and debt levels that are likely to keep the pound weak.

"In a nutshell the public finances figures were awful, and the UK economy is looking very shaky," said Maurice Pomery, managing d…

National Debt, Quantitative easing & Exchange Rates

Pound drops
Sterling fell yesterday, dragged down by minutes from the Bank of England which showed that some policymakers had wanted to extend quantitative easing by more than the amount decided on. More on this in a moment. First, a snapshot of rates as at 08:30am, 20/08/09:
GBP/EUR 1.1641GBP/USD 1.6550GBP/AUD 1.9923GBP/NZD 2.4484GBP/CAD 1.8143GBP/ZAR 13.149GBP/CHF 1.7661GBP/JPY 1.5598Sterling's woes began in early London trade, when traders used comments from UK opposition leader David Cameron, who said Britain's high levels of government debt meant it was running the risk of defaulting on its debt, as a reason to sell the currency. Read the full story here.

Remember these comments, as in the medium to long term, it's likely that these huge levels of government debt are very likely to mean that Sterling will remain weaker than all other major currencies. Other majot economies dont have these huge debt levels, they aren't doing quantitative easing, and they aren'…

Pound falls. BoE minutes & Exchange Rates

Good Morning. Rates for GBP/EUR yesterday broke breifly through 1.17 after better than expected inflation data. We'll look at this in detail in a moment, but first a snapshot as rates stand as 08:30am 19th August 2009:

GBP/EUR 1.1671GBP/USD 1.6450GBP/AUD 2.0029GBP/NZD 2.4526GBP/CHF 1.7711GBP/CAD 1.8213GBP/JPY 154.99GBP/ZAR 13.279UK Inflation
The Key measure of inflation in the UK has unexpectedly remained at 1.8%. Economists had expected the Consumer Prices Index (CPI) to decline to 1.5% in July. The Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments, also unexpectedly rose to -1.4%, from -1.6%. The RPI rate has fallen sharply over the past year as the Bank of England slashed interest rates to a record low amid a recession. The figures suggest that deflationary pressures on the economy may be easing. The Bank aims to keep inflation at 2% to maintain price stability and more broadly, economic stability. Earlier this month, the Bank said it was &quo…

Sterling to US Dollar Forecast August 2009

This morning, we'll take a detailed look at Sterling GBP to USD. A quick morning glance at the currency exchange rates @ 08:30am 18th August 2009:
GBP/EUR 1.1596GBP/USD 1.6394GBP/AUD 1.9833GBP/NZD 2.4376GBP/CAD 1.8102GBP/CHF 1.7628GBP/ZAR 11.380Sterling to US Dollar
The pound fell broadly yesterday, hitting its lowest level in a month against the US dollar as falling equities and oil prices encouraged investors to shun perceived higher risk currencies.

As we've said before, it's now risk sentiment that's proving to be the biggest driver of rates, GBP/USD in particular. As commodity prices fall, investors flock back to the safe haven of the US Dollar, causing strength and a decline in the rate.

Here we see the rate movement for the pound against the US Dollar for the last 3 months. AS you can see, the general trend has been a rise, which now seems to have come to an end. If you have a requirement to purchase US Dollars, then consider locking in rates with a Forward Contract…

Sterling falls on risk sentiment

Good Morning,
Today we'll have a quick review of where rates moved last week, and then look at what data releases we have this week. As usual, let's have a quick look at where rates stand...

Exchange Rates as at 08:30am 17th August 2009 :
GBP/EUR 1.1567GBP/USD 1.6336GBP/AUD 1.9923GBP/NZD 2.4427GBP/CAD 1.8115GBP/ZAR 13.355GBP/CHF 1.7624Last Weeks Trading
The main story of last week was the good data from the EU, and a reverse of risk sentiment, both of which caused rates to fall.

French and German economies both grew by 0.3% between April and June, bringing to an end year-long recessions in Europe's largest economies. Because markets had expected a 0.3% decline, the surprisingly good results strenghtened the Euro and caused rates to fall.

Sterling eased against the dollar on Friday and fell more than 1% on the day versus a resurgent yen after a report showing U.S. consumer confidence fell in early August dampened demand for riskier assets.

"It does reinforce the view that th…

Australian Dollar AUD New Zealand Dollar NZD Forecast 2009

Following several requests of late for more information regards AUD and NZD, today we'll take a detailed look at the antipodean currencies and where rates may head for the remainder of the year.

First, let's take a quick look at the Euro. As at 08:30am 14th August rates are as follows:

GBP/EUR 1.1559
GBP/USD 1.6489
GBP/AUD 1.9632
GBP/NZD 2.4296
GBP/ZAR 13.257
GBP/JPY 156.82

Yesterday we saw figures that show France and Germany have exited the recession. The French and German economies both grew by 0.3% between April and June, bringing to an end year-long recessions in Europe's largest economies.The data came as a surprise, with few analysts expecting Germany and France to start to recover so soon. There's a comprehensive analysis on the BBC website. As the figures were a surprise, we've seen Euro strength and GBP/EUR rates unexpectedly fall.


Right now, the rate is 1.9612. Here we see GBP/AUD over the last 3 months. As you can see, the last month has seen a ste…

Pound Prediction September October 2009

Pound / Euro falls
08:30am 13th August 2009 - The Euro has strengthened this morning following the Germany GDP figures. Gross Domestic Product is a measure of the total value of all goods and services produced by Germany. The GDP is considered as a broad measure of the German economic activity and health.

The figures were slightly better than forecast, and as Germany is the biggest economy in the EU, the Euro has strengthened. Rates as at 08:30am 13th August 2009 are as follows:
GBPEUR 1.1612GBPUSD 1.6554GBPNZD 2.4474GBPAUD 1.9720GBPJPY 159.22GBPZAR 13.238We also saw Sterling weakness yesterday, following the Bank of England Quarterly inflation report. The pound hit a 2 week low versus the dollar as the Bank of England's forecast that inflation would remain well below target cooled speculation of an early interest rate hike. Also we saw UK unemployment rise. The central bank said it was "more likely than not" that inflation would fall below 1 percent in autumn, suggesting t…

Pound vs Euro Exchange Rates 12th August 2009

Today is a big day for UK data, and so we're expecting some movement in Sterling exchange rates.

At 09:30am we have Jobless Claims, Average Earnings, Claimant Count and the Unemployment Rate. At 10:30am we have the Bank of England Inflation Report. The 2 most important pieces of data here are the unemployment and BoE report.

Let's take a closer look, but first a quick look at where rates stand at 08:30am 12th August 2009:
GBPEUR 1.1643GBPUSD 1.6426GBPAUD 2.0038GBPNZD 2.4823GBPZAR 13.446GBPJPY 156.57UK Unemployment
The number of people out of work is expected to rise again when the latest unemployment figures are released by the Office for National Statistics. The jobless rate increased by 281,000 to 2.38 million in the three months to May - the highest jump since 1995.

More clues on the health of the economy will be revealed in the Bank of England's quarterly inflation report (more on that in a moment). We're expecting unemployment to be revealed at 7.7% and an additiona…

Sterling to Euro & US Dollar Forecast, August 2009

Good Morning. Today we'll have a look at GBP/EUR and GBP/USD, and a further analysis of the Quantitative Easing method that has caused rates to tumble in the last week. First let's have a quick look at where rates are @ 08:30am 11/08/09:
GBPEUR 1.1634GBPUSD 1.6494GBPAUD 1.9670GBPNZD 2.4391GBPDKK 8.6607GBPJPY 159.72Yesterdays Trading
Sterling fell yesterday, extending losses triggered last week by the Bank of England's surprise decision to expand quantitative easing, which raised expectations for a dovish tone in the central bank's Inflation Report due on Wednesday. That was in sharp contrast to the dollar, which held most of its gains made on Friday after data showed U.S. job losses slowed last month, boosting speculation for higher U.S. rates.

The pound fell to a one-week low against the dollar below $1.66, while it hovered near a one-week trough against the euro.

Last weeks sterling euro trading perfectly highlighted the notorious volatility of the currency marke…

Pound Euro Rates 10th August 2009

Market Snapshot
GBPEUR 1.1716GBPUSD 1.6617GBPAUD 1.9810GBPNZD 2.4700GBPZAR 13.301GBPCHF 1.7995GBPJPY 161.74Pounds Gains short lived
The pound had a very strong run in the first part of last week, hitting 1 year highs against the US Dollar and close to year highs against the Euro. The gains were due to increased confidence in the UK economy, amid positive data releases showing the UK economy is rising.

The gains were short lived however, as is often the case. As outlined in Fridays Post, the pound plummeted after the Bank of England increased their asset buying programme, and pumped another £50bn into the econonmy.

Sterling fell further on Friday, hitting a one-week low against the dollar in volatile trade due to a broad rise in the U.S. currency following a stronger-than-expected reading of U.S. non-farm payrolls.

The UK currency struggled a day after the Bank of England surprised markets by extending quantitative easing measures to boost the nation's economy, while poor first-quarter …

Quantitative Easing, Bank Results and Exchange Rates

Increased Quantitative Easing Weakens Sterling
Sterling fell across the board yesterday after the Bank of England said it would pump more funds into the banking system than was expected, citing subdued inflation and fragile financial conditions.

The central bank stunned market players by extending its quantitative easing programme to 175 billion pounds from 125 billion, beyond a previous limit of 150 billion pounds. It also held interest rates at 0.5 percent, as expected.

Economists had been evenly split on whether the BoE would effectively choose to print more money to buy assets such as government bonds and corporate debt."That they expanded quantitative easing by 50 billion pounds is more dovish than expected, so sterling is weakening accordingly," said Daragh Maher, senior currency strategist at Calyon in London.

Weak Pound good for UK recovery
"Since the BoE has frequently addressed the positive impact of currency weakness in stimulating the economy, it is unlikely to c…

Pound to Euro & US Dollar Rates very good.

Pound to Euro
Last week saw Sterling continue to march back towards the 1.20 mark, moving up as high as 1.18 on the mid-market. The run continued yesterday, however now seems to have leveled off in anticipation of the data releases from the UK...

This week sees a very active calendar, with major releases on every single day. Yesterday morning saw the manufacturing PMI from the UK and Eurozone, which saw all figures higher than expected, with the UK figures a massive 6% better than forecast. This supported sterling and we briefly saw highs of 1.1815 shortly after the release, extremely positive news for anyone buying Euros.

Tuesday sees PPI inflation data for the Eurozone from June, which is likely to provide a further indication of their position in the current economic cycle, and how soon they are likely to see recovery. On Wednesday we see the services side of the PMI data released, with forecasts suggesting that again, the UK will be stronger than the Eurozone, and also Retail Sales …

Sterling Euro Exchange Rate Outlook August 2009

Last Weeks Trading
Very interesting week last week, with the pound surging against the USD, EUR and most other major currencies. The rise can be mainly attributed to better than expected house price data, which helped push GBP/EUR to 1 month highs. It may have even gone higher, but the pound was pulled back slightly after Fitch ratings agency confirmed its 'AAA' rating with a stable outlook on the UK and warned on UK's high levels of debt.

Market Snapshot @ 08:30am
GBPEUR 1.1768GBPUSD 1.6735GBPAUD 2.0010GBPNZD 2.5218UK DebtFitch said Britain "faces one of the most serious post-crisis fiscal adjustment challenges among 'AAA' governments" and warned fiscal policy needs to be more aggressive in aiming to bring down the deficit."The Fitch statement focused attention on the deteriorating UK fiscal situation," BNP Paribas currency strategist Ian Stannard said.However, investors took some encouragement from the latest GfK/NOP survey showing UK consumer…