Showing posts from November, 2009

Outlook for the pound, and the weeks data.

Good Morning. Today as usual, we'll take a detailed look at the weeks data and how this may affect exchange rates. Let's have a quick look at where rates stand this morning:
GBP/EUR 1.0971GBP/USD 1.6502GBP/AUD 1.8020GBP/NZD 2.3000GBP/CAD 1.7408GBP/CHF 1.6526GBP/ZAR 12.185GBP/JPY 142.10EUR/USD 1.5036
The main news to kick off the week is the debt crisis in Dubai. The main stock markets in Dubai and Abu Dhabi have dived at least 6%. The falls came after Dubai's property developer, Nakheel, asked for trading of some of its Islamic bonds to be suspended. Shares are trading for the first time since the state-owned property company Dubai World asked for an extension on repaying its debts. The central bank of the United Arab Emirates said on Sunday it would provide banks with extra liquidity. While shares in the Middle East dropped sharply, Asian shares rebounded on Monday on hopes the Dubai debt crisis will not spread to other financial markets after the UAE central bank decisi…

Pound falls again on Dubai news

Good Morning. The pound has remained under pressure after concerns over exposure of UK Banks to the debt crisis in Dubai. Rates @ 08:30am are as follows: GBP/EUR 1.0988GBP/USD 1.6325GBP/AUD 1.8207GBP/NZD 2.3175GBP/CAD 1.7521GBP/CHF 1.6578GBP/ZAR 12.350GBP/JPY 140.77EUR/USD 1.4853Reuters have reported that Dubai's shock move earlier in the week to restructure Dubai World, and delay repayment on some of the company's $59 billion of liabilities, sent ripples through financial markets, denting equities and riskier currencies.

Some analysts said the pound was underperforming because of concerns that some UK banks may be affected, although no exposure was confirmed.
"There are concerns regarding the extent of the exposure of the UK banks to Dubai, hence sterling is coming under pressure," said Ian Stannard, currency strategist at BNP Paribas.
The pound is particularly sensitive to any banking sector problems, given the fact that the financial sector makes a large contribution…

Why has pound fallen November '09

Good Morning. The pound has fallen quite a bit overnight, after yesterdays GDP data showed that the UK is the only major economy still in recession. At 08:30am pound exchange rates are as follows:
GBP/EUR 1.0971GBP/USD 1.6556GBP/AUD 1.7971GBP/NZD 2.2914GBP/CAD 1.7407GBP/CHF 1.6560GBP/ZAR 12.197GBP/JPY 143.72EUR/USD 1.508Sterling Falls again
Sterling fell this morning, losing more than 1% against the US Dollar while the pound also fel against the Euro, hitting a 1 month low as it remained under pressure in the wake of Wednesday's gross domestic product data.

The data showed the British economy shrank by 0.3 percent in the third quarter compared with the initial estimate of a 0.4 percent contraction. This came as a disappointment to some who were looking for a bigger revision and it exacerbated concerns that the UK economic recovery is lagging that of other major economies. So, the figures were not as good as some analysts had expected, and so this is the main reason for the dip in …

Pound falls after secret £60bn loans revealed.

Good Morning. Sterling fell yesterday as concerns about the Banking sector dented appetite for riskier currencies, while Bank of England policymakers offered little insight into the outlook for monetary policy. At 08:30am rates stand as follows:
GBP/EUR 1.1127GBP/USD 1.6710GBP/AUD 1.8019GBP/NZD 2.2841GBP/CAD 1.7598GBP/CHF 1.6792GBP/JPY 147.50GBP/ZAR 12.373EUR/USD 1.5012UK Banking Sector
The Bank of England yesterday revealed secret loans to UK banks last year of more than £60 Billion pounds. It was also revealed that Chancellor Alistair Darling had agreed to underwrite any losses which the Bank may have made on the loans.

It's headline news, and rather than repeat it all here, you can see a detailed report on the BBC website here. In terms of the effect on the currency markets, finance forms a huge part of our conomy, and is also our biggest export. This news will do little to spur confidence in the economy, and the pound has fallen as a result.

The big question is what else is the…

Pound Euro & Pound Dollar Forecast

Good Morning. Today we'll take a detailed look at GBP/EUR and GBP/USD. First as usual, we'll have a quick look at where rates stand @ 08:30am:
GBP/EUR 1.1079GBP/USD 1.6525GBP/AUD 1.8013GBP/NZD 2.2785GBP/CAD 1.7553GBP/CHF 1.6744GBP/JPY 146.45GBP/ZAR 12.406EUR/USD 1.4910Euro
Last week began with the release of monthly trade balance data for the Euro zone on Tuesday. This revealed a larger than expected surplus, easing some concerns that a strong Euro is hindering the economy's export performance. As a result this limited the chances of official intervention to stop the Euro rising and ultimately contributed to the GBP/EUR rate dropping towards the end of the week.

Further through the week an absence of any further major Euro zone economic data left the Pound's weakness as the primary source of any Euro gains, particularly after Wednesday’s surprise Bank of England minutes showing a split vote for QE.

However, by Friday GBP/EUR took a further downfall as the Euro gained stren…

Currency Forecast 23rd November 2009

Good Morning, and welcome to a new week in the currency markets. Sterling fell sharply on Friday, falling more than 1% to a 2 week low against the dollar, on concerns over the UK's fiscal health and waning investor appetite for perceived risky currencies. The debt levels were the main news of last week, and caused the pound to fall. At 09:00am Monday 23rd November, rates are as follows:
GBP/EUR 1.1070GBP/USD 1.6584GBP/CAD 1.7591GBP/AUD 1.7970GBP/NZD 2.2665GBP/JPY 147.46GBP/CHF 1.6723GBP/ZAR 12.405GBP/NOK 9.2668EUR/USD 1.4977 Sterling also fell against the Euro, falling to a 1 week low as it slid further in the wake of data on Thursday showing UK public finances deteriorated almost twice as fast as expected last month.The UK government faces mounting pressure to spell out how it will curb public borrowing as it prepares to fight an election due by June 2010. In the Queen's speech, they said it would be halved within 4 years, but didn't spell out any plan at all on how this …

Pound falls on debt fears.

Good Morning. Sterling slipped on Thursday as UK borrowing data underlined Britain's deteriorating finances, while a sell-off in high-risk currencies also kept the pound under pressure. At 08:30am the snapshot of pound rates are as follows:
GBP/EUR 1.1141GBP/USD 1.6610GBP/AUD 1.8068GBP/NZD 2.2744GBP/CAD 1.7675GBP/CHF 1.6849GBP/ZAR 12.452GBP/JPY 147.53EUR/USD 149.05Pound Falls
Sterling fell after data showing that the UKs public finances deteriorated at a much faster pace than expected in October, taking public borrowing to its highest on record. There was also a rise in Retail Sales for the UK, but the borrowing data overshadowed that and caused rates to fall.

Ratings agencies have said Britain may face a possible cut in its sovereign rating if its fiscal position gets worse. This would ruin the appeal of UK government debt and probably prompt investors to pull funds out of the country into other currencies percieved as safer. This will hurt Sterling in the Short to Medium term .


Inflation, BoE and effect on Pound exchange rates.

Good Morning. The pound fell from it's recent highs yesterday after the Bank of England minutes showed a split in the decision to increase the Quantitative Easing measures. At 08:30am this morning, rates are as follows:
GBP/EUR 1.1210GBP/USD 1.6675GBP/AUD 1.8088GBP/NZD 2.2716GBP/CAD 1.7680GBP/JPY 148.34GBP/CHF 1.6956GBP/ZAR 125162EUR/USD 1.4868 Bank of England Minutes
The Bank of England’s Monetary Policy Committee (MPC) was split three ways in November over whether to increase its quantitative easing (QE) scheme - the first time members have voted in three different directions since the controversial policy began in March.

Spencer Dale, the Bank's chief economist, in his first dissent from the majority since QE began in March, voted for no increase at all, arguing that pumping more money into the economy might fuel “unwarranted increases in some asset prices that could prove costly to rectify."

In contrast, David Miles, who joined the MPC in June this year, called for QE t…

Pound vs US Dolllar

Good Morning. The pound rose yesterday after figures showed inflation in the UK rose. Rates @ 08:30am stand as follows:
GBP/EUR 1.1274GBP/USD 1.6801GBP/AUD 1.8046GBP/NZD 2.2534GBP/CAD 1.7681GBP/ZAR 12.510GBP/JPY 149.78EUR/USDUK Inflation
A key measure of UK inflation has risen for the first time since February, official figures have shown. The Consumer Prices Index (CPI) climbed to 1.5% in October, up from 1.1% in September. Meanwhile the Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments and housing costs, rose to -0.8% from -1.4%.

Inflation accelerated mainly because fuel prices fell by a lot less than they did in the same period a year ago. Analysts had expected the rate of inflation to rise, so the figures came as no surprise to the City. "I don't think this is anything that will worry the Monetary Policy Committee [of the Bank of England] too much," said Amit Kara at UBS.

"The MPC has highlighted that inflation is going to …

Pound vs Euro

Good Morning. Rates @ 08:30am Tuesday 17th November are as follows:
GBP/EUR 1.1257GBP/USD 1.6831GBP/AUD 1.8081GBP/NZD 2.2561GBP/CAD 1.7679GBP/CHF 1.6997GBP/ZAR 12.446GBP/JPY 149.46EUR/USD 1.4948GBP vs EUR
On Friday morning the Euro zone officially announced it had come out of recession with a growth in GDP of 0.4% just under expectation for a growth of 0.5%. The currency markets had priced in the figures and so we saw little movement in exchange rates between Sterling and Euro.
The German ZEW think-tank's business survey showed that confidence levels in the Euro zone's largest economy weakened in November, raising some concerns that the economy's recovery could be more tentative in the coming months.
One of the reasons why the Euro zone has recovered quicker than the UK is because their financial sectors account for a smaller proportion of their economies. Stronger exports driven in Germany particularly by the car market has contributed hugely to the Euro zone’s recovery.

EU GDP figures today. Outlook for GBP/EUR

Sterling hit a 1 week low against the dollar yesterday, staying weak after comments from the Bank of England earlier in the week. Also disappointing U.S. data propped up the safe haven US Dollar. The pound rose against the Euro however, coming off an earlier 2 week low, with traders citing selling of euros versus sterling by corporate accounts. Rates @ 08:30am are as follows:
GBP/EUR 1.1190GBP/USD 1.6663GBP/AUD 1.7942GBP/NZD 2.2653GBP/CAD 1.7512GBP/ZAR 12.384GBP/JPY 150.18EUR/USD 1.4886Analysts said sentiment towards the pound remained negative after comments on Wednesday by BoE chief Mervyn King that suggested the BoE was leaving the door open to more Quantitative Easing, and he highlighted the benefits of a weak currency (again!). Of course a weak pound is good for exports, but the fact is we are not a nation of exporters; we import much more, and so a weak pound is worse for most people.

"The market's still reading Mervyn King's comments to be on the dovish side,"…

Pound falls on BoE Comments

Sterling fell sharply against the euro and the dollar on Wednesday after Governor Mervyn King said the Bank of England was open-minded about pumping more money into the economy and highlighted the benefits of a weak pound. Rates @ 08:30am are as follows:
GBP/EUR 1.1038GBP/USD 1.6537GBP/AUD 1.7719GBP/NZD 2.2341GBP/CAD 1.7281GBP/CHF 1.6672GBP/ZAR 12.201GBP/JPY 148.30EUR/USD 1.4979Governor Mervyn King said the UK economic recovery was under way, and signalled that interest rates will remain low at least another year, in a boost to mortgage payers.

But he warned the country has 'only just started along the road' towards getting the economy back to business as usual, in the wake of the worst financial crisis in modern history.

Traders pointed out that the outlook was marginally more optimistic than previous projections, while others focused on downbeat comments from Mr King as he released the Bank's latest Inflation Report. The net result for the pound was a weakening of the curr…

UK at risk of losing AAA rating

Good Morning. The pound fell yesterday after the ratings agency said Britain, due to its huge levles of government debt which we've talked about here before, was the major economy most at risk of losing its triple-A rating. It hurt the pound, and rates @ 08:30am stand as follows:
GBP/EUR 1.1144GBP/USD 1.6755GBP/AUD 1.7948GBP/NZD 2.2545GBP/CAD 1.7510GBP/CHF 1.6828GBP/ZAR 12.272GBP/JPY 150.45EUR/USD 1.5031UK Rating
As the UK has been borrowing heavily to try and pull the economy out of recession, its weak financial position has hurt the pound, and investors and speculative traders often sell Sterling on any suggestion Britain may lose its top-notch rating.

Only Britain, the US, Germany and France are among the major economies are rated AAA and any change could affect the cost of government borrowing.

Today's Bank of England's quarterly Inflation Report could well also negatively affect the pound.

Inflation Report & Unemployment
The Bank of England quarterly publishes a report…

Pound starts to fall - gains over.

Good Morning. Yesterday the pound hit 8 week highs against the Euro, and 3 month highs against the US Dollar. However the takeover bid for Cadburys along with continued worry about the UK economic recovery caused the pound to fall back in afternoon trading. Rates at 08:30am this morning stand as follows:
GBP/EUR 1.1110GBP/USD 1.6649GBP/AUD 1.7966GBP/NZD 2.2524GBP/CAD 1.7635GBP/CHF 1.6788GBP/ZAR 12.353GBP/JPY 149.31EUR/USD 1.4980Pound/Euro
Following a hugely important week for the Pound last week, much focus will now be placed on determining what will happen next for the GBP/EUR cross. Surprisingly, following the Bank of England’s decision to increase its Asset Purchase Scheme by £25 Billion, Sterling has held relatively strong, actually gaining strength against the Euro by Monday morning.

This has been attributed to the wide spread anticipation within the market that this £25 Billion will bring to an end the UK’s Quantitative Easing cycle. Confirmation of this could come later this mont…

Pound outlook week commencing 9th November

Good Morning. The pound rose slightly towards the end of last week, helped by the fact the Bank of England didn't extend the Quantitative Easing measures as much as some had forecast. At 08:30am Monday morning, rates stand as follows:
GBP/EUR 1.1203GBP/USD 1.6772GBP/AUD 1.8088GBP/NZD 2.2761GBP/CAD 1.7830GBP/CHF 1.6919GBP/ZAR 12.451GBP/JPY 151.08EUR/USD 1.4966Sterlings gains
Sterling pared gains against the US Dollar at the ends of last week as a weaker US jobs report left investors more averse to risk and offset the boost to the UK currency from the previous days Bank of England decision.

However, the pound stayed not far from a two-week high against the dollar hit after the central bank on Thursday increased its quantitative easing programme by £25bn , less than the £50bn rise many had forecast.

The top-up to QE broadly supported sterling, particularly as many in the market believe this will be the last time the bank has to pump money in. With the BoE meeting over, analysts said the…

Pound up after BoE, but GBPEUR rates unchanged

Good Morning. Sterling jumped to a 2 week high against the US Dollar on Thursday after the Bank of England expanded its quantitative easing programme by £25bn, confounding some analysts' expectations of a bigger increase. The pound rose slightly agains the Euro, but then fell back on news the Eurozone economy is set to recover. Rates at 08:30am are as follows:

GBP/EUR 1.1164
GBP/USD 1.6619
GBP/CAD 1.7650
GBP/AUD 1.8128
GBP/NZD 2.2847
GBP/CHF 1.6876
GBP/ZAR 12.549
GBP/JPY 150.38
EUR/USD 1.4884

Bank of England Decision
The bank left rates on hold, but increased the QE programme by £25bn. A poll had shown that two thirds of analysts had predicted the BoE would expand its asset-buying scheme, with the consensus being an increase of 25 billion pounds. Some in the market had forecast a 50 billion pound increase.

Analysts said the pound rallied as market participants were relieved the BoE did not take more drastic action on quantitative easing, and on the view that it may hold off from implementing …

Pound in for volatile day - BoE decision due.

Good Morning. The pound rose against the Euro and US Dollar and other currencies yesterday after data showed a higher-than-expected increase in UK service sector activity and as a rebound in equity markets eased risk aversion ahead of a Bank of England policy decision today.

Rates @ 08:30am are as follows:
GBP/EUR 1.1136GBP/USD 1.6513GBP/AUD 1.8231GBP/NZD 2.2972GBP/CAD 1.7603GBP/CHF 1.6807GBP/ZAR 12.644GBP/JPY 149.00EUR/USD 1.4825 Today we have Industrial and Manufacturing Production data for the UK, but the main news is the Interest Rate meetings for the European Central Bank and Bank of England.

Analysts expect the BoE to keep interest rates at their 0.5 % record low, but many see an extension of its quantitative easing programme to inject liquidity into the economy.

Two thirds of economists polled expect the Bank of England to top up its QE programme by at least £25bn in November after the economy unexpectedly contracted between July and September.

But recent stronger data for the manu…

Pound falls on UK Banking news.

Good Morning. Sterling dipped against the US Dollar yesterday after the UK Treasury announced a major shake up of British banks and investors braced for a possible extension of asset purchases by the Bank of England this week. The pound rose against a broadly weaker Euro. Rates @ 08:30am are as follows:

GBP/EUR 1.1165
GBP/USD 1.6479
GBP/AUD 1.8193
GBP/NZD 2.2770
GBP/CAD 1.7512
GBP/CHF 1.6872
GBP/JPY 149.46
GBP/ZAR 12.735
EUR/USD 1.4753

The news that the major banks that the government bailed out will be split up shook Sterling yesterday. You can read a report on the issue on the BBC website here:

As finance is one of the biggest parts of the UK economy, this will likely affect the pound. Indeed Sterling fell against the US Dollar yesterday, but due to weakness in the Euro, GBPEUR rates actually rose slightly despite the news.

"Clearly this is not good news for UK PLC, but it is not happening in isolation - the banking sector in general across…

Pound remains weak on speculation of more QE

Good Morning. The pound fell slightly yesterday despite good manufacturing data. Sterling's rally has stalled, pulling the UK currency back from its highest levels versus the dollar and the euro in more than a month hit in late October, and analysts said traders were unwilling to take on big bets before the BoE policy announcement on Thursday. Rates @ 08:30am are as follows:
GBP/EUR 1.1056GBP/USD 1.6311GBP/AUD 1.8193GBP/NZD 2.2770GBP/CAD 1.7597GBP/CHF 1.6701GBP/JPY 146.71GBP/ZAR 11.654EUR/USD 1.4749GBP/EUR
The Euro stabilised towards the end of last week after early losses against Sterling. Consumer prices in the Euro zone fell 0.1% during the year and combined with a slowdown in money supply growth, to 1.8% in September from 2.6%, made October the fifth consecutive month that the annual rate has remained negative.

In turn this raised fears that the European Central Bank (ECB) may need to keep interest rates low in order to maintain support for the economy. Finally, the week ended …

Pound Outlook November 2009

Sterling was steady against the US Dollar and Euro on Friday, generally consolidating its recovery this week after data showed another rise in UK house prices this month and improving consumer confidence. However, with poor news expected from the BoE this week, these gains could be short lived, and have infact already started to fall. At 08:30am this morning rates are as follows:
GBP/EUR 1.1085GBP/USD 1.6377GBP/AUD 1.8044GBP/NZD 2.2652GBP/CHF 1.6728GBP/CAD 1.7680GBP/ZAR 12.849GBP/JPY 147.64EUR/USD 1.4771The pound's rebound from a steep decline triggered by the surprise fall in 3rd quarter UK output announced a week ago has been strong. It is on track for its biggest weekly rise against the euro in nine months. Also, Figures from the Nationwide Building Society on Friday showed that British house prices rose for a sixth month running in October to register their first annual gain since early 2008.

The pound's bounce this week, also underpinned by solid U.S. growth figures on Thu…