Showing posts from December, 2010

Pound falls over 1% as 2010 draws to a close

31st December 2010
Good morning. Sterling had a very poor day yesterday, falling to near 2 month lows versus the Euro, a near 2 year low versus the Japanese Yen, an all-time low against the Swiss franc and a multi-year low against the New Zealand dollar. We'll look at this in a moment after the usual snapshot of rates for the last time this year:

GBP/EUR 1.1608GBP/USD 1.5474GBP/AUD 1.5194GBP/NZD 1.9996GBP/CAD 1.5451GBP/CHF 1.4500GBP/ZAR 10.231GBP/JPY 125.88GBP/HUF 322.89EUR/USD 1.3328Sterling drops over 1% in one dayThere was no particular poor data yesterday that caused the big drops for Sterling. Traders cited year end clearer selling while thin liquidity exaggerated price movements."Sterling has seen quite a move but it has all been down to selling by a particular clearer," said Neil Mellor, currency strategist at Bank of New York Mellon.

He said a fragile UK economy was weighing on sterling sentiment, with investors concerned about the negative impact of the government&…

Forecast for Sterling, Euro and US Dollar

30th December 2010
Good morning. The pound rose slightly against the US Dollar yesterday, but remained between €1.17 and €1.1740 against the Euro in thinned trade. Today we'll look at the state of Sterling, the Euro and the US Dollar. First the usual snapshot of rates as at 08:30am: GBP/EUR 1.1706GBP/USD 1.5500GBP/AUD 1.5227GBP/NZD 2.0175GBP/CAD 1.5484GBP/CHF 1.4559GBP/ZAR 10.245GBP/JPY 126.27GBP/HUF 326.78EUR/USD 1.3237SterlingThe pound has been under pressure since last week as higher than expected unemployment data, falling house prices, a hike in taxes, cuts in government spending and softer growth than forecast cloud the economic picture going into 2011.

Analysts said the continued weakness hampered the outlook for future growth. The Financial Times forecast UK house prices will drop as much as 10 percent in 2011 as government spending cuts kick in and access to mortgages remains restricted. Also, last week Bank of England policymaker Paul Fisher said the economy could suffer a…

Sterling remains weak in thin holiday trading

29th December 2010
Good morning. I hope everybody enjoyed the Christmas break. Little has happened during the Bank Holidays in the markets, and sentiment for Sterling is still weak following last weeks weak economic data. Today we'll look at the data released in the run up to the New Year break. Rates at 08:30am this morning are as follows:
GBP/EUR 1.1715GBP/USD 1.5372GBP/AUD 1.5163GBP/NZD 2.0184GBP/CAD 1.5334GBP/CHF 1.4641GBP/ZAR 10.266GBP/JPY 126.22GBP/HUF 326.43GBP/HKD 11.960EUR/USD 1.3119Sterling remains weak following poor dataLast week a run of poor data including Housing figures and negative comments from the Bank of England caused the pound to fall against major currencies such as the Euro and US Dollar. Little has happened to change this during the Christmas break. Trade is very thin and likely to remain so this week, and so we don't expect any huge changes. In the thinned holiday trade however, any economic news that surprises the markets could have a bigger impact t…

Pound remains weak; BoE Comments

24th December 2010
Good morning. The pound remained weak yesterday following Wednesdays revision of UK growth. Also yesterday one of the Bank of England policy members said that the economy could suffer another period of contraction last year. Rates this Christmas Eve at 08:30am are as follows:

GBP/EUR 1.1771GBP/USD 1.5467GBP/AUD 1.5402GBP/NZD 2.0659GBP/CAD 1.5585GBP/CHF 1.4846GBP/ZAR 10.406GBP/HKD 12.032GBP/JPY 128.22GBP/HUF 325.94EUR/USD 1.3139Bank of England commentsMPC member Paul Fisher's comments came a day after data showed downward revisions to economic growth in the past two quarters. He said the economy could suffer another period of contraction next year.

Even as spending is seen rising during Christmas, analysts warned a rise in VAT at the start of 2011 would curb consumer demand and lead to weaker growth in 2011. Also, austerity measures and internal government tensions are keeping investors negative on the pound."The concern that the VAT rise, higher public sector …

Sterling falls on revised GDP Sterling/Euro

23rd December 2010
Good morning. Yesterday a downward revision in UK economic growth reminded investors the country's recovery remains fragile. The revised GDP figures weakened Sterling against the Euro, and hit a 3 month low against the US Dollar. Rates at 08:30am this morning are as follows:
GBP/EUR 1.1739GBP/USD 1.5389GBP/AUD 1.5338GBP/NZD 2.0636GBP/CAD 1.5581GBP/CHF 1.4636GBP/ZAR 10.395GBP/JPY 127.64GBP/HUF 322.92GBP/DKK 8.7436EUR/USD 1.3106Revised GDP weakens the Pound

The UK economy grew less than previously estimated between July and September, revised figures have shown. The yearly estimate was also cut, with the ONS saying that GDP in the third quarter had grown by 2.7% compared with the same point last year, down from the previous estimate of 2.8%.

Market participants said the pounds losses were exacerbated in holiday thinned markets, and analysts expected further losses would be limited after Bank of England minutes showed growing concerns about inflation risks. Rates fell …

Sterling falls on public borrowing data

22nd December 2010
Good morning. The pound fell yesterday on record high UK borrowing, and that called into question whether the government can meet its deficit cutting target. After some poor UK data, analysts said investors were concerned that the recovery may falter in the first quarter in 2011. As a result, rates at 08:30am are as follows: GBP/EUR 1.1772GBP/USD 1.5468GBP/AUD 1.5496GBP/NZD 2.0797GBP/CAD 1.5690GBP/CHF 1.4748GBP/ZAR 10.498GBP/JPY 129.36GBP/HUF 324.85GBP/NOK 9.2395EUR/USD 1.3133Sterling falls on public borrowing

The amount of new public sector borrowing hit a fresh record high in November. The borrowing figure was pushed higher by increased spending on health, defence and the EU. The latest figures are likely to raise concerns about the government's efforts to reduce the UK's budget deficit.

A Treasury spokesman said: "November's borrowing figures show why the government has had to take decisive action to take Britain out of the financial danger zone.&qu…

Rates remain steady in thin Christmas trade

21st December 2010
Good morning. Sterling rose against a struggling Euro in thin Monday trade, as the single currency was hampered by debt worries. However gains for the pound were slight, with UK exposure to the euro zone hampering the rally. At 08:30am this morning rates are as follows:
GBP/EUR 1.1831GBP/USD 1.5549GBP/AUD 1.5617GBP/NZD 2.0833GBP/CAD 1.5817GBP/CHF 1.4972GBP/ZAR 10.574GBP/JPY 130.11GBP/NOK 9.2890GBP/HUF 326.06GBP/AED 5.7053EUR/USD 1.3137Thin trade keeping price movements minimal The year end light trading conditions are keeping rate fluctuations minimal, as many investors are waiting until the New Year. The Euro is expected to stay weak however, as investors await more aggressive solutions from European leaders to address debt concerns in the region.The debt problems are weakening the Euro, however as the UK is exposed to the Eurozone it's also affecting Sterling, keeping any gains limited.

The Bank of England's semi-annual Financial Stability Report released las…

Pound to Euro in run up to Christmas

What next for GBP/EUR rates as Christmas draws in - Sterling Forecast

Lsat week we have seen a relatively powerful Sterling exchange rate, by recent standards at least, fall from a height of just below 1.20 to 1.17 on the nose.

Thursday and Friday saw Euro-Zone Heads of State meet in Brussels, to discuss the Euro, the Euro-Zone support fund and financial-market stresses, and early week support for the single currency from Angela Merkel and Nicolas Sarkozy, may have been joint reasons for the boost in Euro strength against the Pound.

As ever, Quantitative Easing is a topic of choice for both the BoE and the FED, which will weaken their respective currencies, a prospect which could see Trichet smile, investor’s pull funds and all potential overseas property buyer’s panic, as taking advantage of a falling rate, whilst undesirable, is far more beneficial than holding fire and buying when it is lower.

This was emphasised in trading last week, as exchanging £100,000 to €’s Monday would have see…

Sterling gains slightly on Retail Sales, but not much.

17th December 2010
Good morning. Sterling edged higher against the the dollar and the euro on Thursday on robust retail sales data, ending 4 straight days of decline. Gains were limited however due to a mixed outlook for the economy. Rates at 08:30am this morning are as follows:
GBP/EUR 1.1747GBP/USD 1.5626GBP/AUD 1.5801GBP/NZD 2.1141GBP/CAD 1.5720GBP/CHF 1.5001GBP/ZAR 10.610GBP/HKD 12.150GBP/JPY 131.13GBP/HUF 320.01EUR/USD 133.01Sterling gains on Retail SalesUK retail sales rose 0.3% in November, broadly in line with expectations. But the previous month's sales were stronger than initially thought, with the Office for National Statistics (ONS) revising up October's figure from a rise of 0.5% to 0.7%.

The ONS said November's growth was driven by sales of toys, sporting goods, watches and jewellery. Retails sales are taking as an overall indicator of consumer confidence, and so the better than expected results helped push Sterling slightly higher against both the Euro and US D…

Pound falls to 3 week low vs Euro; high unemployment

16th December 2010
Good morning. For the 4th day in a row, Sterling fell further against most major currencies. The culprit this time was high unemployment figures for the UK. This is despite figures showing retail sales rose at their fastest pace in 8 years. Rates at 08:30am this morning are as follows:
GBP/EUR 1.1776GBP/USD 1.5599GBP/AUD 1.5778GBP/NZD 2.1151GBP/CAD 1.5666GBP/CHF 1.5132GBP/ZAR 10.656GBP/JPY 131.11GBP/HUF 322.90EUR/USD 1.3242Poor employment figures push Sterling lowerUnemployment in the UK increased by 35,000 in the three months to October to 2.5 million, the Office for National Statistics (ONS) has said. It is the first time that the jobless measure has risen for six months.

The surprise increase was driven by public sector job losses, and pushed the unemployment rate up to 7.9%. The worse than expected figures pushed the pound lower, and we are now at 3 week lows versus the Euro.Dilemma for Bank of England

The data could also heighten the policy dilemma for the Bank of …

Sterling falls vs Euro and US Dollar despite high inflation

15th December 2010
Good morning. The pound fell again yesterday against both the Euro and US Dollar. UK Inflation came in higher than expected, and investors took profits on a strong pound, and the sell off caused weakness for Sterling. At 08:30am this morning rates are as follows:
GBP/EUR 1.1806GBP/USD 1.5736GBP/AUD 1.5848GBP/NZD 2.1009GBP/CAD 1.5847GBP/CHF 1.5118GBP/ZAR 10.748GBP/JPY 132.10GBP/HUF 324.18EUR/USD 1.3330UK Inflation rises; interest rates to rise?Inflation rose to a 6 month high in November, figures showed yesterday. This is the latest surprisingly good economic figures for the UK, and initially it strengthened the pound as it dented lingering hopes of further monetary easing by the Bank of England.

Andrew Sentance, the most hawkish member of the Bank's Monetary Policy Committee, said the data strengthened his view that interest rates should rise now. "I think we would reinforce our credibility by gradually moving interest rates upwards," Sentance said. Usual…

Pound falls against Euro; poor house prices to blame

14th December 2010
Good morning. Sterling fell quite sharply vs the Euro yesterday, as weak housing data and comments from the Bank of England suggest more Quantitative Easing could be on the way. Against the US Dollar rates actually rose, due to a weakening USD as a result of fears the country's credit rating is at risk. We'll look at all of this in detail after the usual snapshot of rates as at 08:30am:
GBP/EUR 1.1795GBP/USD 1.5885GBP/AUD 1.5912GBP/NZD 2.1062GBP/CAD 1.5973GBP/CHF 1.5325GBP/ZAR 10.801GBP/HKD 12.350GBP/JPY 132.31GBP/ZAR 10.799EUR/USD 1.3460Pound falls on Housing Data Property website Rightmove said house prices fell 3 % in the past month, citing economic uncertainty and low mortgage approvals and forecasting bigger falls in 2011. The poor figures pushed the pound down fairly sharply. Today we have the RICS survey, and if this replicates the results then we expect the pound to fall further. More Quantitative Easing?Bank of England Deputy Governor Charles Bean sai…

Pound vs Euro forecast December 2010

What next for GBP/EUR rates in December?

Last week proved to be a relatively quiet week for the GBP/EUR exchange rate with limited movements in an uncertain market. That being said Sterling still managed to reach a 10 week high against the single currency, but found high resistance at 1.20 with the Pound not yet strong enough to break through.

The limited data releases brought little change as manufacturing information was better than expected and The Bank of England held rates at the record low of 0.50% for the 21st month in a row. They also left the quantitative easing (QE) stimulus package at £200bn leaving investors wondering what to expect next from the UK in the coming months.

Investors seem to be confused as to which currency to back; the Euro or Sterling. The two economies are showing increased negativity with well documented problems from Eurozone members Greece, Ireland, Portugal and Spain, and for the UK we see an economy struggling to control inflation and refusing to distanc…

Pound vs Euro forecast outlook

10th December 2010
Good morning. The pound rose again very slightly against the Euro and US Dollar yesterday, following the decision from the Bank of England to hold off on any further Quantitative Easing and left rates on hold. At 08:30am this morning rates are as follows: GBP/EUR 1.1938GBP/USD 1.5800GBP/AUD 1.6021GBP/NZD 2.1034GBP/CAD 1.5941GBP/CHF1.5498GBP/ZAR 10.878GBP/HKD 12.283GBP/NOK 9.5109GBP/HUF 331.00GBP/JPY 132.17EUR/USD 1.3233Bank of England leave rates on hold

The Bank of England's Monetary Policy Committee (MPC) has kept UK interest rates on hold at 0.5%, and unveiled no new quantitative easing (QE) measures. Both decisions were expected, but it will not be clear whether they were unanimous until the minutes of the meeting are released.

At the MPC's November and October meetings, there was a three-way split among its nine members. In those meetings, one member voted for a rate rise, another for more QE. So in reality we will have to wait 2 weeks for the important pa…

Pound gains vs Euro, BoE and Trade balance today

9h December 2010
Good morning. After a very flat start to the week, yesterday the pound gained against the Euro and US Dollar, following a surge in industrial orders which was a further indication that UK economic recovery is gaining momentum. Rates at 08:30am are as follows:
GBP/EUR 1.1900GBP/USD 1.5814GBP/AUD 1.6010GBP/NZD 2.1107GBP/CAD 1.5947GBP/CHF 1.5535GBP/ZAR 10.892GBP/DKK 8.8690GBP/JPY 132.48GBP/HUF 328.79EUR/USD 1.3287Industrial orders boost SterlingIndustrial orders rose to their highest since June 2008 yesterday surprising the markets. The news follows Tuesdays better than expected Manufacturing data, and this has increased the value of Sterling.

"The decent numbers out of the UK, plus the peripheral concerns in Europe, have tended to push sterling up," said Adrian Schmidt, currency strategist at Lloyds. Yesterday rates vs the Euro broke through €1.19 again, touching a 10 week high. While the problems in the Eurozone remain, the Euro is also weak which is also the re…

Pound vs Euro gains due to better Manufacturing Data

8th December 2010
Good morning. The pound rose yesterday against the USD and EUR following better than expected Manufacturing data. We also had a good GDP estimate that has reduced the chance of further Quantitative Easing in the UK, and this has helped the pound gain. Rates at 08:30am this morning are as follows:

GBP/EUR 1.1888GBP/USD 1.5714GBP/AUD 1.6021GBP/NZD 2.0893GBP/CAD 1.5889GBP/CHF 1.5519GBP/DKK 8.8640GBP/HUF 331.86GBP/ZAR 10.954GBP/JPY 131.80Sterling boosted by Manufacturing dataThe UK's manufacturing output grew by 0.6% in October, the fastest pace since March, official figures have shown. The growth was twice as fast as analysts had expected, and the figure comes a day after an industry body said the sector was "powering ahead".

The wider measure of industrial output - which includes mining and oil production - fell 0.2% in October. However, analysts said much of this fall was down to seasonal factors, and the overall picture was encouraging.

The result was a muc…

Pound vs Euro forecast December 2010

7th December 2010
Good morning. Sterling edged slightly higher against the Euro yesterday, as investors focused on euro zone debt problems ahead of a meeting of European finance ministers. Today we'll look at where Sterling vs Euro rates will move in December and the forecast outlook. First the usual snapshot of rates as at 08:30am:

GBP/EUR 1.1805GBP/USD 1.5776GBP/AUD 1.5888GBP/NZD 2.0643GBP/CAD 1.5832GBP/CHF 1.5418GBP/ZAR 10.837GBP/JPY 130.30GBP/HUF 328.86EUR/USD 1.3357Pound vs EuroThe euro zone ministers met yesterday and will face pressure to increase the size of a €750 bn safety net for troubled members in order to halt a debt crisis in the single currency bloc.

That is followed by a meeting today of ministers from the European Union, who are expected formally to approve an 85 billion euro aid package for Ireland and discuss the reform of EU budget rules. An IMF report obtained by Reuters said the euro zone should have a bigger rescue fund for member states in trouble. Germany re…

Pound vs Euro & Pound vs US Dollar

6th December 2010

Where to for Sterling / Euro pair?

Last week started relatively unspectacularly as the focus remained on the debt crisis in the Euro-Zone with particular attention on Ireland and Portugal and the stance that the ECB would take.

We saw Sterling exchange rates gain momentum against the Euro in trading on Tuesday and Wednesday seeing highs on both days and flirting with 1.1985 on Weds, a price not seen since the late Sept and the then Euro sell-off and subsequent decline. Sterling gained support from defensive inflows as investors saw Sterling as a safer option on the back of positive news from independent analysis of the UK budget deficit and good PMI figure in construction on Wednesday albeit UK economic calendar being notably light.

Sterling strength evaporated on Thursday in a choppy trading session as the focus shifted to the imminent ECB decision, the fact that the Euro had not been oversold and doubts remained over the UK recovery on the back of Nationwide showing a …

Pound falls against Euro, outlook for further declines

3rd December 2010
Good morning. Sterling fell versus the Euro yesterday, as traders cited the ECB buying Portuguese and Irish debt, helping to calm jitters over the euro zone periphery and lend support the ailing single currency. This has reversed the recent trend and rates are now falling. At 08:30am rates stand as follows:

GBP/EUR 1.1818GBP/USD 1.5640GBP/AUD 1.5951GBP/NZD 2.0636GBP/CAD 1.5662GBP/CHF 1.5496GBP/NOK 9.4801GBP/JPY 130.69GBP/ZAR 10.830EUR/USD 1.3226Euro gains strength pushing GBP/EUR rates down"The ECB have reportedly been buying Portuguese debt and the spreads have come in, which is why the euro has rallied against sterling and other currencies," said Adrian Schmidt, currency strategist at Lloyds Banking Group.

There was talk in the markets that the ECB might be buying up troubled countries' bonds on the quiet, despite no confirmation of this action from Mr Trichet. Accordingly, both Irish and Portuguese 10-year bonds rose.

Philip Shaw, an economist at Investe…