Tuesday, 21 December 2010

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 1.1831
  • GBP/USD 1.5549
  • GBP/AUD 1.5617
  • GBP/NZD 2.0833
  • GBP/CAD 1.5817
  • GBP/CHF 1.4972
  • GBP/ZAR 10.574
  • GBP/JPY 130.11
  • GBP/NOK 9.2890
  • GBP/HUF 326.06
  • GBP/AED 5.7053
  • EUR/USD 1.3137

Thin 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 last week showed Britain's banks remained vulnerable to increased European sovereign debt turmoil, and it's this that is keeping rates fairly steady against the Euro.

Snow affecting retail sales

There has been some speculation that the weather will hamper retail sales. In reality I don't subscribe to this, as anybody putting it off will still need to buy their products, so this will be offset when the weather improves. So while it may be affecting things at the moment, overall this will be taken in to account in Sterling's value and will have little effect.

We won't go on about the snow here though; it's enough that the news channels are giving it rolling 24 hour coverage, with correspondents posted live in 17 cities at once reporting on the conditions minute by minute. It's hilarious and providing much amusement here at Foremost.

Rest assured we will be here every day this week to trade currencies for our clients, whatever the weather.

Today's Data

UK public finance data is due for release on Tuesday, followed on Wednesday by the minutes from the BOE Monetary Policy Committee's latest decision on interest rates, which analysts expect will show another split in the voting.

"Another three-way split is expected but this should not cause more than a ripple in FX markets," said analysts at Credit Agricole.

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