Showing posts from October, 2009

Pounds gains on US Data may not last.

Good Morning. The pound rose yesterday after strong US GDP Data showed that the US is now out of recession. This economic data bolstered the view of an improving global economy, spurring demand for currencies considered to be higher-risk such as the pound. Rates @ 08:30am 30th October 2009 stand as follows:
GBP/EUR 1.1152GBP/USD 1.6528GBP/AUD 1.8099GBP/NZD 2.2659GBP/CAD 1.7644GBP/CHF 1.6843GBP/JPY 150.33GBP/ZAR 12.811EUR/USD 1.4813
Sterling strength, but why?
There was actually negative data for the UK yesterday. Data showing weak growth in UK money supply was pretty much overlooked, and also the figures kept speculation intact that the Bank of England may expand its programme of buying UK assets to help stimulate the economy.

In other negative data, comments from a BoE policymaker that a weak domestic currency had helped UK exporters also attracted little notice from the currency markets. BoE board member Paul Fisher on Thursday was quoted as saying that a lower sterling rate had give…

Pound up, US GDP Figures today

Today we'll see if the US has exited recession, and this may cause some volatility for the pound today, even though there is little UK data. This morning rates are as follows:
GBP/EUR 1.1148GBP/USD 1.6437GBP/AUD 1.8207GBP/NZD 2.2655GBP/CAD 1.7694GBP/CHF 1.6846GBP/JPY 149.20GBP/ZAR 12.894EUR/USD 1.4740US Gross Domestic ProductOfficial figures due later are expected to show that the US economy has come out of recession, but analysts warn the continuing recovery will be slow. The data, set to be released by the Commerce Department at 1230 GMT, is tipped to show that the US economy grew about 3% between July and September.If so, then it will leave the UK the only major economy still in recession, other than Spain that entered recession after the UK. This positive news from the US may boost risk sentiment, and drive investment towards riskier currencies such as the pound. Commentators say the growth has been greatly helped by President Obama's $787bn (£480bn) stimulus package. So…

Pound still being held back by threat of more QE

Good Morning. Sterling rose against the Euro yesterday, but wiped out earlier gains against the dollar, after surprisingly weak US consumer confidence data pulled investors toward the liquidity and perceived safety of the US Dollar. Rates @ 08:30am are as follows:
GBP/EUR 1.1035GBP/USD 1.6352GBP/AUD 1.7972GBP/NZD 2.2138GBP/CAD 1.7482GBP/CHF 1.6691GBP/JPY 149.03GBP/ZAR 12.611EUR/USD 1.4810Shock news last week that the UK economy contracted again in the third quarter is still the main driver for the pound at the moment, and prompted investors to acknowledge it is too early for the Bank of England to remove its stimulus, and that quantitative easing may be extended as soon as next month.

Attention is already turning toward the BoE's Monetary Policy Committee meeting next week and whether its 175 billion pound QE programme will be expanded. Friday's dismal GDP data had clipped a 2 week rally in the pound, which had recovered from a seven-month low against the euro after some upbeat…

Euro, US Dollar, Aussie Dollar, Kiwi Dollar Forecast

Good Morning. Last Friday's data prompted investors to acknowledge it is too early for the Bank of England to remove its stimulus for the economy, and that quantitative easing may be extended as soon as next month. This caused the pound to fall. Today we'll look at a detailed forecast for Pound to Euro, US Dollar, Aussie Dollar & Kiwi Dollar.

Sterling recouped some losses yesterday as traders adjusted short positions in the currency, but many in the market said the ongoing weakness in the UK economy would keep the pound under downward pressure. Rates @ 08:30am are as follows:
GBP/EUR 1.0978GBP/USD 1.6323GBP/AUD 1.7803GBP/NZD 2.1866GBP/CAD 1.7442GBP/ZAR 12.390GBP/JPY 150.52EUR/USD 1.4887EUR
Last week saw a very turbulent week, with Sterling starting at a low 1.0880 against the Euro, and strengthening to just over the 1.11 mark in the early part of the week, as Bank of England minutes on Wednesday morning showed unanimous support for a halt in the Quantitative Easing program…

Sterling Exchange Rate Forecast Oct Nov Dec 2009

Good Morning. Today we'll look at last weeks events and how these affect exchange rates. A look at our Director of Foreign Exchange giving his views on the currency markets on CNBC, and as usual on a Monday, a full breakdown of the weeks data and possible effects on the currency markets. So to kick off, lets watch our recent slot on CNBC. If you cant see the video, watch it on YouTube here.

At 09:00am this morning, rates are as follows:
GBP/EUR 1.0834GBP/USD 1.6296GBP/AUD 1.7619GBP/NZD 2.1581GBP/CAD 1.7164GBP/CHF 1.6402GBP/ZAR 12.179EUR/USD 1.5036
Last week, the pound made some gains after the Bank of England released their minutes. These showed a positive outlook for the UK economy, and they said that further Quantitative Easing is on hold for the time being. The pound rose on the back of this news, and we saw good exchange rates. This BBC article published on the day, shows how the pound soared on the news. It was not to last however, as Fridays GDP figures confirmed we are now in …

Update - Pound plummets

*** UPDATE ***
GDP monthly drop of 0.4% against forecast of 0.2% gain - the pound is dropping in a BIG way. In the few minutes since the announcement, the pound has fallen over a cent against the EUR and USD. Open a free Trading Facility Open an online Trading Account Email Me

Pound down on Retail Sales - GDP figures today.

Good Morning. The pound fell yesterday after the Retail Sales figures were slightly worse than expected & a Bank of England policymaker said quantitative easing could be extended if necessary. Sterling has risen again this morning. Rates at 08:30am stand as follows:
GBP/EUR 1.1101GBP/USD 1.6690GBP/AUD 1.7996GBP/NZD 2.2048GBP/CHF 1.6779GBP/CAD 1.7520GBP/ZAR 12.378GBP/JPY 153.12EUR/USD 1.5029Retail SalesRetail sales showed no growth in September, confounding expectations for a 0.5 % increase, while the annual rise of 2.4 %was below forecasts of a 2.8 percent increase. The worse than expected figures caused Sterling to fall from 1 month highs against the US Dollar and Euro.Bank of EnglandBank of England figures also released on Thursday showed that lending to businesses improved sharply in August but still remained negative. Some analysts reckon the sluggish lending and demand for credit, together with a bleak outlook for the public finances means sterling's upside should be lim…

Sterling gains on BoE News

The pound rose across the board yesterday, after the minutes from the recent Bank of England meeting showed that all 9 members voted to keep the Quantitative Easing measures on hold, for the time being. Rates this morning are as follows:
GBP/EUR 1.1073GBP/USD 1.6597GBP/AUD 1.7959GBP/NZD 2.1964GBP/CAD 1.7370GBP/CHF 1.6732GBP/JPY 151.68GBP/ZAR 11.172EUR/USD 1.4981Bank of England Minutes
The pound has rallied after the Bank of England said its monetary policy committee voted 9-0 earlier this month not to pump more cash into the economy.The MPC was also unanimous in agreeing to keep interest rates on hold at 0.5%.

The decision not to inject more money was seen as a positive sign that the UK economy was recovering and did not need further help from the central bank. The committee said that QE had had a "substantial" impact, but all members agreed that "recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been agre…

Bank of England & Pound Exchange Rates

Good Morning. The pound rose against the US Dollar yesterday, but remained steady at around €1.10 against the Euro. Mervyn King gave a speech yesterday, but mostly covered bank regulation and made little mention of the currency markets. Rates this morning are up a little as follows:
GBP/EUR 1.1030GBP/USD 1.6497GBP/AUD 1.7782GBP/NZD 2.1788GBP/CAD 1.7296GBP/CHF 1.6658GBP/ZAR 12.144GBP/JPY 149.46EUR/USD 1.4952The pound rose to a near 4 week high against the Euros this morning, lifted by the view that Sterlings falls in recent weeks may have been overdone. There was some caution, however, ahead of Wednesday's release of Bank of England minutes, where any hint that the central bank may be considering another extension to quantitative easing is likely to push the pound lower again.Bank of England Speech
Yesterday the governor gave a speech in which Mr King said that government support for the banking sector had been "breathtaking" at close to £1 trillion. "Never has so m…

Euro and US Dollar Exchange Rates

Good Morning. The pound remained fairly range bound against the Euro yesterday, still under €1.10. Sterling gained against the US Dollar however on weaker than expected US data. Rates this morning are as follows:
GBP/EUR 1.0924GBP/USD 1.6372GBP/AUD 1.7659GBP/NZD 2.1718GBP/CAD 1.6848GBP/CHF 1.6536GBP/ZAR 11.995GBP/JPY 147.60Last Weeks Trading
The pound rallied against the euro on Thursday amid increased optimism from the Bank of England. The currency closed up more than two points against the euro at €1.0889 a three week high. To give some perspective as to the strength of this rally, the pound set its biggest one day advance against the euro in eight months.

The rise was partly explained by comments made by Paul Fisher, a member of the Bank of England's Monetary Policy Committee, who said there were positive signs that the MPC's £175bn Quantitative Easing (QE) programme was working. However, Monday morning brought a new twist to the Bank of England Quantitative Easing (QE) deba…

Sterling Exchange Rate Forecast Oct 2009

Good Morning. As outlined in Fridays post, the pound made some good gains at the end of last week, recovering some of the ground lost over the previous 2 weeks. This was due to BoE comments that Quantitative Easing may be working. Before we look at rates and today's view on the market, we'll look at our Director of Foreign Exchange speaking on CNBC recently. If the video does not play, you can view directly on YouTube here

Rates at 08:30am stand as follows:

GBP/EUR 1.0881
GBP/USD 1.6252
GBP/AUD 1.7628
GBP/NZD 2.1751
GBP/CAD 1.6827
GBP/CHF 1.6491
GBP/ZAR 11.892
GBP/JPY 147.16
EUR/USD 1.4930

Despite the gains, the UK is still struggling to recover. It is "still premature" to talk about the beginnings of a recovery despite growing optimism, according to the influential Ernst & Young Item Club. It predicted some growth in the second half of 2009 but said the economy would struggle to achieve 1% growth in 2010. This will likely keep the pound weak.

Bank of England and Quantitativ…

Pound makes big gains against USD & EUR

Sterling racked up its biggest 1 day gain against a basket of currencies including the Euro and US Dollar in nearly a year yesterday, after a UK policymaker's comments prompted speculation the Bank of England may not extend quantitative easing. Rates at 08:30am stand as follows:
GBP/EUR 1.0921GBP/USD 1.6290GBP/AUD 1.7658GBP/NZD 2.1883GBP/CHF 1.6558GBP/CAD 1.6817GBP/ZAR 11.904GBP/JPY 148.03Bank of England & Quantitative Easing
The reason the pound has been so weak recently, is due to the fact our interest rates are so low, and likely to remain so for a long while. Also, the QE measures were predicted to be extended, which has kept the pound low.

Monetary Policy Committee member Paul Fisher yesterday told the Financial Times the BoE's interest rate cuts and injection of money into the economy via asset purchases were working, and it's this positive view that caused yesterdays rally, even though there was little UK data out yesterday.

Sterling has come under heavy pressure in…

Pound makes gains on unemployment data

Sterling rose slightly on Wednesday, up sharply for most of the day on stronger than expected UK jobs data, before losing ground on a Financial Times report on the Bank of England's quantitative easing programme. Rates this morning stand as follows:

GBP/EUR 1.0785
GBP/USD 1.6113
GBP/AUD 1.7490
GBP/NZD 2.1550
GBP/ZAR 11.637
GBP/JPY 144.12
GBP/CHF 1.6318

UK Unemployment
Official statistics showed the unemployment rate held steady at 7.9 percent in August. Economists had expected a rise to 8 percent. Because the rise was less than forecast, the pound rose. The number of Britons claiming jobless benefit rose by 20,800 in September, less than expected and the smallest rise since May 2008.

This was enough to trigger a relief recovery but the market is still broadly bearish on sterling because of Britain's deteriorating fiscal position and the likelihood of interest rates staying low for a long period.

"The fact that sterling is stronger is evidence of positioning rather than the strength …

Pound falls again after poor economic forecasts

Good Morning. The pound fell yet again yesterday, after reports from both the Centre for Economics and Business Research & the British Chambers of Commerce cast doubt on the pace of UK economic recovery. Rates @ 08:30am stand as follows:
GBP/EUR 1.0673GBP/USD 1.5766GBP/AUD 1.7412GBP/NZD 2.1395GBP/CAD 1.6332GBP/JPY 141.93GBP/CHF 1.6191GBP/ZAR 11.588Why has the pound fallen again?
As mentioned above, it's the two reports that cast doubt on the UK economy. As this is the main news of the week so far, we'll look at each report in detail.

Centre for Economics and Business Research
UK interest rates will stay low for years amid tax rises and spending cuts, according to an economic forecast by the CEBR. They believe the rate will remain at its current 0.5% level until 2011 and not reach 2% until 2014.

The report also predicted Sterling will weaken further, falling to $1.40 against the USD and "possibly" below 1 euro to the pound. Its forecast is based on the government man…

Pound continues to fall. Weekly currency outlook.

Good Morning. The pound had a torrid run last week, with rates steadily falling. Sterling fell further this morninig, hitting its lowest level in almost five months against the dollar on the view that UK interest rates will remain low and that the outlook for the British public finances remains bleak. Rates @ 08:30am are as follows:
GBP/EUR 1.0719GBP/USD 1.5749GBP/AUD 1.7508GBP/NZD 2.1652GBP/CAD 1.6426GBP/JPY 142.30GBP/ZAR 11.730Pound falls further
Sterling fell on Friday, hurt by a broadly firmer dollar after comments by U.S. Federal Reserve Chairman Ben Bernanke seen by market players as hawkish.

Those with Euros to sell have benefited by a week long run of poor UK data, bringing rates to the best they have been for around 5 to 6 months:

As you can see from the chart, rates have continued their downward trend after poor UK data outweighed the positive news.

Data on Friday showing UK output prices surprisingly turned positive and a slight narrowing in the trade deficit also failed to turn…

Exchange rates after BoE decision.

Good Morning. The pound remained fairly steady yesterday after the news from the UK and EU central banks that interest rates will be left on hold at 0.5% and 1.0% respectively. At 08:30am rates stand as follows:
GBP/EUR 1.0860GBP/USD 1.5999GBP/AUD 1.7686GBP/NZD 2.1638GBP/CAD 1.6834GBP/CHF 1.6490GBP/JPY 142.91GBP/ZAR 11.775Bank of England & Quantitative Easing
It was expected that rates would be left on hold, and the main news again was Quantitative Easing. A phrase that this time last year meant nothing to most people, but that has now become one that we have been using lots over this year!

BoE rate setters held back from providing further aid for the British economy yesterday despite concerns over the fragility of the UK's pull out of recession. The Bank of England voted to hold interest rates at their 0.5 per cent record low and continue with its £175 billion programme to boost the money supply at its latest two-day meeting. You can read their press release here.

The Monetary Po…

BoE and ECB Interest Rates & Quantitative Easing

The pound was mixed yesterday, falling against the US Dollar but gaining slightly against the broadly soft euro, a recovery which helped lift sterling up from 5 month lows hit earlier in the day.

There were no major UK economic data releases yesterday with markets waiting for todays announcement from the Bank of England. Rates @ 08:30am are as follows:
GBP/EUR 1.0868GBP/USD 1.6061GBP/AUD 1.7771GBP/NZD 2.1682GBP/CAD 1.6939GBP/DKK 8.0883GBP/JPY 141.68GBP/ZAR 11.771Bank of England & ECB Interest Rate decisions.
The Bank of England and European Central bank will announce their decision on interest rates today. The BoE may also expand its Quantitative Easing programme. We expect the BoE to hold interest rates at 0.5% for the 7th month in a row, and the ECB will also likely leave rates unchanged at 1%.

The key to what will happen with exchange rates today is whether the BoE will maintain its programme of pumping money into the economy - called quantitative easing - but is not tipped to exte…

Pound remains weak, eyes now on BoE tomorrow

Good Morning. Sterling hit a 5 month low against a basket of major currencies yesterday, and a new 1 week low against the Euro after an unexpected fall in UK manufacturing output raised doubts about the British economy's recovery prospects. Rates at 08:30am are as follows:
GBP/EUR 1.0815GBP/USD 1.5916GBP/AUD 1.7827GBP/NZD 2.1615GBP/CAD 1.6804GBP/JPY 140.72GBP/CHF 1.6368GBP/ZAR 11.775Analysts said the market was caught off guard and surprised by the weak production data, and this drove investors back towards the safe haven US Dollar. The net result is slightly lower exchange rates. The currency markets at the moment are prone to react strongly to weak data, and the problem with the pound, is that it is already trading with a negative bias, so any negative number for the UK is a signal to sell sterling, and this is what's keeping rates low at the moment. The dramatic fall in UK industrial production followed a mixed bag of economic data in the past week, and raised the prospect …

Interest Rates and Exchange Rates

Sterling edged down against the euro on Monday, erasing earlier gains made after data showed Britain's services sector grew more strongly than expected. The pound remained pressured on expectations monetary policy would stay loose for some time, with no change foreseen at a Bank of England policy meeting later this week.

Last night Australia surprised the markets by raising interest rates by 0.25% to 3.25%. This was not expected, and AUD has strengthened and GBP/AUD rates have fallen as a result. Rates at 08:30am stand as follows:
GBP/EUR 1.0874GBP/USD 1.6019GBP/AUD 1.8061GBP/NZD 2.1807GBP/CAD 1.7087GBP/CHF 1.6440GBP/JPY 142.89GBP/ZAR 11.966This suprise move in Australian interest rates is a worry, as it may mean other countries are now recovered enough to do this. It's likely other zones such as the EU and USA will also raise rates before we do in the UK, and this will keep the pound weak, and exchange rates low. Last week saw Sterling rise against the Euro, ending 0.65% up, …

Sterling Exchange Rate Forecast October 2009

Good Morning, and welcome to a new week. Today we'll have a quick look at where rates are, and then have a detailed look at what the week may hold for the pound and Sterling Exchange Rates. Pound rates are as follows @ 08:30am 5th October 2009:
GBP/EUR 1.0895GBP/USD 1.5938GBP/AUD 1.8246GBP/NZD 2.2153GBP/CAD 1.7161GBP/CHF 1.6466GBP/ZAR 12.160GBP/JPY 143.12Pound rates this morning
The pound fell slightly this morning on expectations monetary policy in Britain would remain loose for longer than in other countries as the euro zone and UK central banks meet to decide policy this week.

Sterling earlier rose against the dollar as the absence of any new commitment on currencies from the Group of Seven countries over the weekend gave traders a green light to sell the U.S. currency. A weaker US Dollar often benefits riskier currencies such as the pound.

Going forward, the BoE is expected to maintain the pace of its asset purchases and keep interest rates at a record low when it ends a policy me…

Sterling remains weak.

Sterling gained against a broadly weaker euro on Thursday as European officials expressed discomfort over the single currency's recent rise.The euro extended losses against the pound after European Central Bank President Jean-Claude Trichet said excess currency moves have adverse implications. Earlier in the week, he said it was "extremely important" to have a strong dollar. Rates however have already started to drop from yesterdays levels, and the dollar has also strenghtned, causing Cable to fall. At 08;30am rates stand as follows:
GBP/EUR 1.0919GBP/USD 1.5871GBP/AUD 1.8288GBP/NZD 2.2276GBP/ZAR 12.312GBP/JPY 141.87GBP/CAD 1.7290UK House Prices
This morning we had the Nationwide House Price data. UK house prices have now recovered to the same level as a year ago, according to the latest Nationwide figures.
The average price of a home last month was equal to September 2008, it said.
The building society said that UK house prices rose by 0.9% in September compared with Augu…

Exchange Rate Forecast Oct, Nov, Dec 2009

Sterlings rise has been shortlived, and the pound fell yesterday, reversing early gains against the Dollar and Euro after a weak reading of U.S. manufacturing activity triggered some safe-haven flows into the U.S. currency. Before we look at rates, here is our latest slot on CNBC, where our Dealing Director talks about the US Dollar. If you can't view the video, click here to watch it on You Tube.

Rates at 08:30am 1st October are as follows:
GBP/EUR 1.0945GBP/USD 1.5978GBP/AUD 1.8093GBP/NZD 2.2089GBP/CHF 1.6606GBP/JPY 143.84GBP/ZAR 12.054The pound initially climbed 1 % against the US Dollar, boosted by data showing a jump in UK consumer sentiment and signals from the previous day that the Bank of England may not cut its bank reserves deposit rate anytime soon.

Sterling relinquished those gains after a reading of business activity in the USA failed to return to growth in September as expected, raising concerns about the recovery prospects of the U.S. economy, which cut risk demand and…