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Showing posts from December, 2009

Pound recovers at end of year.

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Sterling recovered from lows against the US Dollar and Euro yesterday, caught up in the end of year flows and holiday-thinned trading volumes. Rates @08:30am are as follows: GBP/EUR 1.1194GBP/USD 1.6132GBP/AUD 1.7931GBP/NZD 2.2194GBP/CAD 1.6908GBP/CHF 1.6633GBP/JPY 148.87GBP/ZAR 11.863EUR/USD 1.4406Sterling is still weighed down by gloom over the economy and rising public debt. However, traders said late month end flows towards the end of the session helped spark a solid recovery in euro/sterling, with extremely thin volumes helping to exaggerate price movements.
This year has been challenging for the UK currency. Although sterling has appreciated by around 6 percent against the euro in 2009, this was from a record low point late in 2008 - almost exactly a year ago, when GBP/EUR rates almost reached parity. We saw a recovery to nearly €1.20, however when the Bank of England decided to create £200bn pounds in Quantitiative Easing to try and boost the economy, rates tumbled again.
Where a…

Pound still under pressure, rates down.

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Good Morning. Sterling dropped against the US Dollar and Euro yesterday, but strategists said the moves were due to holiday-thinned volumes. It's hard to be bullish on the UK economy and 2010 will be a difficult year for the UK. Any strength in sterling is just a product of it being undervalued. Rates @ 08:30am are as follows:
GBP/EUR 1.1078GBP/USD 1.5883GBP/AUD 1.7805GBP/NZD 2.2150GBP/CHF 1.6490GBP/CAD 1.6646GBP/JPY 146.36GBP/ZAR 11.747EUR/USD 1.4343Good news for UK Retail SalesShoppers have been flocking to the High Street over the Christmas weekend, with numbers far exceeding those from this time last year, figures have shown. The number of shoppers out on Sunday, 27 December was 17.9% up on the same Sunday last year, said Experian, a research house that measures footfall. Experts said shoppers may be racing to beat the VAT increase in January.It's important to remember though the fact that this year, retailers did not start their sales before Christmas. Last year they sla…

Pound largely unchanged after Christmas break.

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Good Morning and welcome back after the Christmas break. Exchange rates are much as they were before the break, with GBP/USD rates slightly up, and GBP/EUR pretty much unchanged. Rates @ 08:30am are as follows:
GBP/EUR 1.1126GBP/USD 1.6058GBP/AUD 1.7974GBP/NZD 2.2543GBP/CAD 1.6717GBP/CHF 1.6532GBP/ZAR 11.947GBP/JPY 147.03EUR/USD 1.4428Sterling has been weighed down this week since a disappointing revision to third quarter UK growth figures, and as minutes from the latest Bank of England policy meeting were perceived as leaving the door open to further monetary easing.

"Sentiment towards sterling is still overwhelmingly negative. If there are any crowded trades out there it's that people are very short of sterling," said Adam Cole, global head of FX strategy at RBC Capital Markets.

It is difficult to see any catalyst for any correction, even though sterling is historically very cheap at the moment.

This Weeks Data
It's a quiet week for data releases due to the short week.…

Pound falls after fears of more QE

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Sterling fell to its lowest in more than 1 week against the Euro and many other major currencies yesterday, after the Bank of England minutes were seen as leaving the door open to a further expansion of its Quantitative Easing asset buying programme. Rates @ 08:30am are as follows:
GBP/EUR 1.1131GBP/USD 1.5985GBP/AUD 1.8112GBP/NZD 2.2645GBP/CAD 1.6753GBP/CHF 1.6581GBP/JPY 145.85GBP/ZAR 12.047EUR/USD 1.4353The pound fell after a Daily Mail article said there may be more QE, however most think this won't happen, and as we know the Daily Mail do like alarmist stories, so I wouldn't read too much into it at the moment as no proper news source believes it will happen.
Not really that much happening in the currency markets today in terms of data releases. US - Jobless Claims and Japanese Jobless Rate is about it, as the markets slow as Christmas approaches.
It is important to note however that as trade volumes are very thin this week, any positive or negative news can have a bigger i…

Sterling down after BoE minutes

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Good Morning. Sterling dipped against the US Dollar and Euro this morning after Bank of England policy minutes for December showed a unanimous vote to keep rates at a record low and maintain its asset purchasing target. Rates @ 11:15am are as follows (later than usual - I was stuck in the snow!)
GBP/EUR 1.1178GBP/USD 1.5939GBP/AUD 1.8217GBP/NZD 2.2782GBP/CAD 1.6800GBP/CHF 1.6674GBP/JPY 146.26GBP/ZAR 12.284EUR/USD 1.4254Bank of England Minutes
All nine members of the Bank of England's Monetary Policy Committee (MPC) voted to hold interest rates at its December meeting. Minutes from the meeting also showed that the MPC was unanimous in voting to maintain the £200bn quantitative easing (QE), or asset buying, programme.

The MPC agreed that the medium-term outlook for inflation had not changed since its November inflation report, and also said that it was difficult to identify with any certainty whether the economy had turned, adding that events in Dubai and Greece were a reminder of th…

Pound remains under pressure

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Sterling remained under pressure on Monday after dipping to two-month lows against the dollar late last week after a spate of weak UK economic data. Rates @ 08:30am are as follows:

GBP/EUR 1.1221
GBP/USD 1.6083
GBP/AUD 1.8211
GBP/NZD 2.2736
GBP/CAD 1.7019
GBP/CHF 1.6791
GBP/ZAR 12.376
GBP/JPY 146.61
GBP/NOK 9.3891
EUR/USD 1.4327 Pound to Euro
Last week saw Sterling steadily climb against the Euro, reaching highs not seen since early November. This was more due to Euro weakness than Sterling strength, with several credit rating agencies reducing the credit ratings of Spain and Greece, undermining the single currency.

Another factor supporting Sterling last week was renewed optimism over the credit problems in Dubai, as Abu Dhabi is now looking likely to be able to cover any shortfall in repayments. This came as welcome news to UK banks, who are believed to have up to £5bn exposure to the situation.

Looking to the week ahead, markets may be a little quieter in the run up to the Christmas break, with…

Pound remains weak over fears of more Quantitative Easing

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Good Morning. Sterling held steady this morning, after dipping to 2 month lows against the US dollar late last week. Pound Euro rates are still better than of late, due to weakness in the Eurozone. The pound remains under pressure however due to a spate of weak UK economic data and a broadly firmer dollar. Rates at 11am Monday 21st December are as follows:
GBP/EUR 1.1240GBP/USD 1.6120GBP/AUD 1.8223GBP/NZD 2.2745GBP/CAD 1.7134GBP/CHF 1.6799GBP/ZAR 12.292GBP/JPY 145.72GBP/NOK 9.4212EUR/USD 1.4337Pound to US Dollar & Euro
Rates have dropped due to a weak pound, and better than expect data from the US cause strength in the dollar. Against the Euro, fears over the EU banking sector and the downgrading of some EU countries credit rating have weakened the single currency. The pound remains weak, but the Euro is weaker, cause rates to climb last week.

Markets will watch for any further news of Quantitative Easing from the Bank of England, as this will likely be the main driver for Sterlin…

Pound up on Jobs data

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Good Morning. The pound rose yesterday again, after better than expected jobs data for the UK. At 08;30am this morning, rates are as follows:
GBP/EUR 1.1260GBP/USD 1.6222GBP/AUD 1.8192GBP/NZD 2.2742GBP/CAD 1.7306GBP/CHF 1.6966GBP/NOK 9.4462GBP/JPY 145.46EUR/USD 1.4398UK EmploymentThe number of people unemployed in the UK rose by 21,000 between August and October to 2.49 million. The increase was the smallest rise in the jobless total since the 2nd quarter in 2008, Office for National Statistics (ONS) figures showed. The markets were expecting the figures to be much worse, and that's why the pound rose yesterday.Analysts said the figures boosted optimism for a rebound in the UK economy in the fourth quarter, although concerns remained that unemployment may rise again next year as the government is forced to rein in spending to reduce a ballooning deficit, and so this spike may be temporary. Speaking on the data, UK finance minister Alistair Darling said they were "very enco…

Pound / Euro at one month high

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Good Morning. Pound Euro rates rose yesterday after fears over the Austrian banking sector weakened the Euro, making it cheaper to purchase. The pound is still weak though, and exchange rates to other currencies such as the US Dollar dropped. Rates @ 08:30am are :
GBP/EUR 1.1185GBP/USD 1.6260GBP/AUD 1.8132GBP/NZD 2.2690GBP/CHF 1.6919GBP/NOK 9.4279GBP/CAD 1.7254GBP/ZAR 12.074GBP/JPY 145.74EUR/USD 1.4537Weak Euro
Oesterreichische Volksbanken, Austria's top cooperative bank, was on a regulator's watchlist at risk of nationalisation yesterday. Worries over Austrian banks slammed the Euro to its lowest in more than two months against the dollar and lowest against the pound in a month. investors then sold the Euro, mostly against the US Dollar, which weakened the Euro and caused pound euro rates to climb. Pound to Dollar rates dropped.

UK Inflation
UK inflation picked up pace in November, driven largely by higher petrol prices, official figures show. The consumer prices index (CPI) …

Pound remains flat. EUR & USD Forecast

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Good Morning. In a light day for UK data yesterday, the pound rose slightly on news that Dubai has been bailed out by Abu Dhabi to the tune of £10bn. Read a report on the BBC site here. This boosted risk appetite for riskier currencies such as the pound.

However, concern surrounding Britain's public debt and potential threat to its triple-A sovereign credit rating meant the pound lost some of the small gains. At 08:30am rates are as follows:
GBP/EUR 1.1160GBP/USD 1.6256GBP/AUD 1.7900GBP/NZD 2.2505GBP/CAD 1.7256GBP/CHF 1.6879GBP/ZAR 12.090GBP/JPY 144.67GBP/NOK 9.4761EUR/USD 1.4559Euro
The main reasons rates are higher are two fold. First, the news that Dubai has been bailed out is a good signal for Sterling. Perhaps a seemingly distant influence it is important to remember that Sterling is perceived as a riskier currency far more likely to attract investors when the global stage is stable. Additionally with much of Dubai’s money borrowed from British banks any news of a bale out is li…

Pound outlook for December 2009

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Good Morning. As usual for a Monday, we'll have a quick look at where rates went last week, and a full breakdown of the weeks data that may affect exchange rates. This morning, pound rates are as follows:
GBP/EUR 1.1057GBP/USD 1.6217GBP/AUD 1.7806GBP/NZD 2.2369GBP/CAD 1.7216GBP/CHF 1.6722GBP/ZAR 12.120GBP/JPY 143.70GBP/NOK 9.3658EUR/USD 1.4662Overview of last week.
Last week we saw Greece and Spain have their credit ratings reduced, weakening the Euro and causing GBP/EUR rates to climb. There were fears the UK may face the same problem, but on Friday major ratings agency said Britain's top-notch sovereign rating was under no immediate threat.

Sterling fell against the dollar, however, as stronger-than-expected U.S. data lent broad support to the U.S. currency, while worries about the UK's shaky situation continued to weigh on sentiment towards the pound.

The pre budget report gave little real news, and was more like an pre election report. The chancellor said our huge defici…

Pound largely unchanged after BoE

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Good Morning. The pound slipped very slightly against the US Dollar and the Euro yesterday, over concerns over the UK's fiscal position and the prospect of low UK interest rates well into next year didn't help Sterling. At 08:30am pound rates are as follows:
GBP/EUR 1.1067GBP/USD 1.6312GBP/AUD 1.7804GBP/NZD 2.2449GBP/CAD 1.7135GBP/CHF 1.6730GBP/ZAR 12.256GBP/JPY 144.88GBP/NOK 9.3582EUR/USD 1.4739The Bank of England held rates at 0.5% as expected yesterday, and there was no new Quantitative Easing.

This had little impact on the Pound, which had earlier stemmed losses from the previous day in the wake of finance minister Alistair Darling's pre-budget report and on persistent concerns about Britain's fiscal health.

UK Interest Rates
The Bank of England kept rates on hold, and economists are predicting that they will keep interest rates at 'one per cent or lower' for the next five years.

The prediction will delight millions of homeowners who are saving a fortune from th…

Pound largely unchanged after pre Budget Report

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Good Morning. Sterling was mixed yesterday after the pre-budget report. The pound briefly rallied against the euro and the dollar on Wednesday after UK finance minister Alistair Darling said there will be no windfall tax on bank profits, however the lack of any clear direction on our deficit doesn't bode well. This morning rates are as follows:
GBP/EUR 1.1057GBP/USD 1.6254GBP/AUD 1.7789GBP/NZD 2.2364GBP/CAD 1.7187GBP/CHF 1.6727GBP/JPY 143.16GBP/NOK 9.3728GBP/ZAR 12.318EUR/USD 1.4692Pre Budget Report
We won't analyse the whole report here, simply cover what it means for exchange rates. For an outline of the key points, the BBC has a clear simply fact sheet.

The only real points that may affect currency were on growth forecasts. Economy forecast to shrink 4.75% in 2009, worse than 3.5% forecast in April. Growth of 1%-1.5% expected in 2010 and 3.5% in 2011 and 2012. It wasn't made clear how Darling arrived at these figures though, and the IMF and credit agencies have a less …

Pre Budget report & effect on exchange rates

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Good Morning. Today is very important for the currency markets, as we have the pre budget report for the UK along with some other important measures of the economy. We'll look at this in detail in a moment. First as usual, a snapshot of where rates stand. This is likely to be very different by the end of the day:

GBP/EUR 1.1022GBP/USD 1.6243GBP/AUD 1.7907GBP/NZD 2.2882GBP/CHF 1.6646GBP/DKK 8.2010GBP/JPY 142.38GBP/NOK 9.3765EUR/USD 1.4734Before we look at today's data, we'll review what happened yesterday. The pound weakened over fears over our financial health. We also saw industrial Production and Manufacturing production figures come in much worse than expected. This caused the pound to fall.

So, if the pound fell, why did GBP/EUR rates go up?
Well this is more to do with the Euro than Sterling. We saw Fitch the credit reference agency reduce Greeces’ credit rating, weakening the Euro. The pound is still very weak, and it was the bad news from the EU that weakened the Euro …

Pound to Euro & Pound to US Dollar Forecast

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Good Morning. Sterling fell to its weakest in 10 days against the US Dollar yesterday, and unwound some of the previous session's gains versus the euro, weighed down by banking sector concerns and worries over UK fiscal health in the run up to the pre budget report this week. At 08:30am rates are as follows:
GBP/EUR 1.1045GBP/USD 1.6368GBP/AUD 1.7962GBP/NZD 2.2950GBP/CAD 1.7228GBP/JPY 145.66GBP/ZAR 12.246EUR/USD 1.4819Euro
Following a very quiet week in terms of movement much focus will now be placed on the Bank Of England Interest Rate decision on Thursday of this week to help determine the future direction of the GBP/EUR cross.

Any further quantitative easing would be viewed as Sterling negative by investors while an announcement that this scheme has reached and end would almost certainly bode well for the struggling Pound. If you have any upcoming requirement to either buy or sell Euros it would be well worth paying close attention to this release and any accompanying statements.

L…

The weeks data, and Foremost on CNBC

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Good Morning. Sterling rose against the Euro and US Dollar on Friday, but trimmed its gains as the U.S. currency surged after surprisingly strong jobs data. Today, we'll have a quick look at where rates went last week and as usual have a detailed look at the weeks data releases that may affect exchange rates.

First, we'll watch our Director of Foreign exchange on CNBC recently, talking about the pound strength and the US Dollar safe haven status, which is what's driving it. If you cannot view the video automatically, watch it on YouTube here.






Last Weeks Trading
The main reason for the pounds gains towards the ends of last week were the better than expected jobs data. As Adam mentioned on CNBC, earlier in the year the dollar enjoyed safe haven status. This meant that investors flocked to the USD and strengthened the currency. Now the world is exiting recession, investors are unwinding these positions, and as a result the US Dollar is weakening and the pound benefited.

UK Bank B…

Sterling rises, outlook for December.

The pound gains. Sterling up at the start of December.
The pound rose on Friday ahead of the weekend, after better than expected Non Farm Payrolls data from the USA.

As I outlined in Fridays post, the report is highly volatile. Analysts expected the figure to show a decline of over 100 thousand jobs. However, the actual figure was an astonishing 11 thousand. This is much much better than expected, and has given confidence in the US markets.

How does this help the pound?
Confidence in the US Markets mean investors that have been hoarding US Dollars due to the currencies safe haven status, are now investing into riskier currencies. Sterling is one that is benefiting, and this is the reason the pound rose on Friday.

However, the gains may be short lived over fears of our level of debt. There's the governments pre budget report next week, and there are rumours there will be some bad news on the amount the UK owe, and the ways in which it's going to be paid back.

So, this could be the …

Pound falls after better news from the EU

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The pound fell against the Euro and US Dollar yesterday after weaker than expected UK services sector survey. Also, the European Central Bank detailed steps to withdraw monetary stimulus, which strengthened the Euro and caused rates to fall. We've seen some recovery this morning however, and at 08:30am rates are as follows:
GBP/EUR 1.1028GBP/USD 1.6623GBP/AUD 1.7951GBP/NZD 2.2957GBP/CAD 1.7558GBP/CHF 1.6617GBP/ZAR 12.219GBP/JPY 146.43EUR/USD 1.5069 News from Europe
The European Central Bank yesterday left rates on hold at 1% as expected, and this news did not really affect exchange rates. The speech afterwards however caused the Euro to strengthen and Pound to Euro rates fell as a result. They announced they would be lifting the stimulus measures, which signalled that the EU economy is recovering. The ECB announcement pushed sterling lower against the euro as it highlighted the market's view that the Bank of England is set to lag behind other major central banks in terms of e…

Important day for GBP/EUR rates

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Good Morning. The pound rose against most currencies yesterday, after a period of decline. This morning at 08:30am rates are as follows:
GBP/EUR 1.1035GBP/USD 1.6689GBP/AUD 1.7906GBP/NZD 2.2916GBP/CAD 1.7457GBP/CHF 1.6638GBP/JPY 146.44GBP/ZAR 12.117EUR/USD 1.5117Sterling rose against the USD and EUR yesterday, extending gains made the previous day as possible fallout from Dubai's debt-related problems eased as it looks like UK banks are not as exposed to the debt problems there as first thought. Risk assets also got a boost after data showed U.S. private sector employers shed fewer jobs in November from October, marking the eighth straight monthly decline in private-sector job losses.The pound also rose against a broadly weaker yen, traders said. The yen fell in the wake of the Bank of Japan's emergency policy meeting on Tuesday where it said it provide more liquidity through new fixed 3-month funding.Eurozone
Today is an important day for GBP/EUR in particular, as we have lo…

Pound up slightly with house prices

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Good Morning. Sterling rose against a broadly weaker dollar on Tuesday, although gains were somewhat hampered as data showed growth in UK manufacturing activity unexpectedly slowed. Rates @ 08:30am are as follows:

GBP/EUR 1.0990
GBP/USD 1.6605
GBP/AUD 1.7884
GBP/NZD 2.2792
GBP/CAD 1.7341
GBP/CHF 1.6569
GBP/JPY 144.74
GBP/ZAR 12.058
EUR/USD 1.5103

UK House Prices
The pound also rose slightly after better than expected UK house price data. UK house prices have risen for the seventh consecutive month, helped by better-than-expected news from the job market, the Nationwide has said. But overall there has been some surprise that prices have continued to rise steadily in the recession.

The Bank of England yesterday said Britain's economy has probably passed its low point and is likely to recover strongly over the coming years, but inflation was not an immediate threat.

A Reuters poll on Tuesday showed all respondents said the BoE has nearly finished with its quantitative easing programme but won…

Pound drops after confidence falls.

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Good Morning. Sterling hit a one-month low against the euro on Monday after an unexpected fall in British consumer confidence underlined weakness in the domestic economy.

The pound also slipped against the dollar after earlier gaining on the view that Dubai may have avoided the worst of its debt-related problems, prompting some demand for currencies considered to be higher risk. Rates @ 08:30am are as follows: GBP/EUR 1.0945GBP/USD 1.6476GBP/AUD 1.7960GBP/NZD 2.2852GBP/CAD 1.7292GBP/CHF 1.6516GBP/JPY 143.29GBP/ZAR 12.138EUR/USD 1.5045Pound/Euro








This week will see the European Central Bank announce its latest interest rate decision, Although it is expected to remain at 1% a rate increase cannot be ruled out with the Euro zone now officially out of recession and building towards full recovery. However, the Euro could find further support if the GDP projections are more optimistic than expected, and if it signals a phasing out of stimulus measures more quickly than previously expected.
Tues…