Tuesday 16th August 2011
Good morning. Sterling fell against the Euro yesterday, on worries there would be more Quantitative Easing in the UK. The Euro also gained strength on a jump against the Swiss Franc. The Pound gained against the US Dollar however, after a batch of weak US data weakened the USD. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1355
• GBP/USD 1.6335
• GBP/AUD 1.5662
• GBP/NZD 1.9670
• GBP/CAD 1.6075
• GBP/ZAR 11.687
• GBP/JPY 125.42
• GBP/DKK 8.4582
• GBP/NOK 8.9205
• EUR/USD 1.4378
Sterling falls against stronger Euro
The Pound slipped against a stronger euro during trading yesterday. The broad gains in the single currency were led by a jump against the Swiss franc. There is speculation that the Swiss central bank may announce more measures to stem the franc's strength, and this benefited the Euro, making it more expensive to purchase.
The euro also climbed on the back of buying by a UK bank, while traders said steady selling by UK corporates and sovereign investors tempered sterling's rally versus the dollar.
Sterling gains against US Dollar
Sterling rose against the USD yesterday after a batch of weak U.S. economic data hurt the U.S. currency, but concerns about the UK recovery and the chance of monetary easing are expected to keep the pound in check. The poor data from the US made the dollar cheaper to buy, and this is why rates climbed against USD despite dropping against the Euro.
Euro strong, Dollar weak, what about Sterling?
There is much UK economic data this week, including figures on retail sales and unemployment, and also the minutes to the recent BoE decision. Retail Sales are expected to show high street sales are struggling to rise while the jobs picture remains gloomy.
Even if the data shows the UK recovery is faltering however, analysts said the UK was not looking as bleak as the euro zone which is being hit by the debt crisis and slower growth in core countries, including France.
For this reason, many in the markets expect Sterling to be supported against the euro this week. Beware however, as comments from Bank of England policymaker David Miles yesterday said economic recovery was "fragile" and it was possible that more stimulus from quantitative easing might be necessary at some point. This would significantly hurt the Pound.
We start in the EU, where we have GDP figures from Germany, Europe’s largest economy. There are also GDP figures for the EU as a whole, in addition to EU Trade Balance. From the UK we have inflation data (Consumer Price Index). From the USA we will see the latest measures of Industrial Production and Housing Starts.
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