Friday, 24 December 2010

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 1.1771
  • GBP/USD 1.5467
  • GBP/AUD 1.5402
  • GBP/NZD 2.0659
  • GBP/CAD 1.5585
  • GBP/CHF 1.4846
  • GBP/ZAR 10.406
  • GBP/HKD 12.032
  • GBP/JPY 128.22
  • GBP/HUF 325.94
  • EUR/USD 1.3139

Bank of England comments

MPC 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 spending cuts, higher unemployment, the government in a bind is central in people's minds," said Kit Juckes, currency strategist at Societe Generale. "So the pound has no natural buyers right now."

Christmas Break

This is the last working day until the 29th December, and so this will be the last update until then. There is no economic data today as markets wind up for the holiday break.

I would like to thank all our regular readers of this blog for helping to make it one of the most popular currency blogs in the UK, and also wish you a very Merry Christmas and a prosperous new year. Blog updates will start again as usual next Wednesday.