GBPEUR/GBPUSD
The Pound rallied against the majority of the major currencies yesterday, consolidating above 1.16 versus the Euro and trading close to the 1.60 level against the U.S Dollar, as equities rose and global risk appetite improved. Accelerating inflation has rekindled speculation that the Bank of England will eventually need to lift UK interest rates from 0.5%, particularly since the BoE minutes on Wednesday revealed that another member voted for an increase in January.
The Bank of England face a difficult balancing act this year, with members concerned about the economic recovery and accelerating inflation. The Monetary Policy Committee has been split three ways on the best course of action to calm prices, but with the economy slipping back into recession, policy makers are unlikely to raise interest rates in the current climate....
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Monday 31 January 2011
Thursday 27 January 2011
GBPEUR/GBPUSD
The Pound rallied against the U.S Dollar and the Euro yesterday, bouncing back from the previous day's decline, after the minutes from the Bank of England's last policy meeting showed that one more member joined Andrew Sentance in recommending an interest rate increase from the current 0.5%. Policy maker Martin Weale, a relatively new member on the monetary policy committee, put forward his wish to increase borrowing costs, after a report last week showed that UK inflation has accelerated to 3.7%.
The governor Mervyn King said in a speech that consumer prices may breach the 5% barrier this year, but with the economy slumping back into a recession, the central bank faces a difficult balancing act in the months ahead. In stark contrast, MPC member Adam Posen, once again, voted to expand the quantitative easing program from £200 billion to aid the recovery, while the other six members adopted a "wait-and-see" approach.
The GDP data on Tuesday has dispelled any prospect of an interest rate hike before the fourth quarter, but the minutes yesterday may provide an underlying degree of support to Sterling, as at least one more member has joined Sentance in his campaign for higher rates. The minutes stated that "for most members, recent developments implied that the risk to inflation in the medium term had probably shifted upwards. For two members, the evidence suggested that the balance of risks was already sufficiently clear to warrant an immediate increase.".. Read more
The Pound rallied against the U.S Dollar and the Euro yesterday, bouncing back from the previous day's decline, after the minutes from the Bank of England's last policy meeting showed that one more member joined Andrew Sentance in recommending an interest rate increase from the current 0.5%. Policy maker Martin Weale, a relatively new member on the monetary policy committee, put forward his wish to increase borrowing costs, after a report last week showed that UK inflation has accelerated to 3.7%.
The governor Mervyn King said in a speech that consumer prices may breach the 5% barrier this year, but with the economy slumping back into a recession, the central bank faces a difficult balancing act in the months ahead. In stark contrast, MPC member Adam Posen, once again, voted to expand the quantitative easing program from £200 billion to aid the recovery, while the other six members adopted a "wait-and-see" approach.
The GDP data on Tuesday has dispelled any prospect of an interest rate hike before the fourth quarter, but the minutes yesterday may provide an underlying degree of support to Sterling, as at least one more member has joined Sentance in his campaign for higher rates. The minutes stated that "for most members, recent developments implied that the risk to inflation in the medium term had probably shifted upwards. For two members, the evidence suggested that the balance of risks was already sufficiently clear to warrant an immediate increase.".. Read more
Friday 21 January 2011
GBPEUR/GBPUSD
The Pound declined against the U.S Dollar yesterday, the first slump in nine days, amid signs of persistent weakness in the UK economy and better-than-expected U.S housing data. The UK currency dipped against 13 out of the 16 most actively traded currencies, as the latest UK unemployment data showed that the jobless rate amongst 16-24 year-olds is increasing at the fastest rate since records began in 1992.
Ian Stannard, senior currency strategist at BNP Paribas SA, said "the dollar is really reacting positively to the stronger data out of the U.S." The Pound slumped 1% to 1.5850 by the close of trading last night, while the UK currency was 0.4% lower versus the Euro. Sterling had previously advanced 3.4% against the Dollar over a nine day period, its longest winning streak since the beginning of August.
Earlier this week, the latest inflation data showed that consumer prices accelerated to 3.7% in December, faster than the 3.4% forecast, and the Pound rallied on speculation that the Bank of England will be forced to raise interest rates to combat rising prices. However, with slowing economic growth and rising inflation, the UK economy could be bound for a period of stagflation and officials are likely to refrain from a rate hike until absolutely necessary. ...Read more
The Pound declined against the U.S Dollar yesterday, the first slump in nine days, amid signs of persistent weakness in the UK economy and better-than-expected U.S housing data. The UK currency dipped against 13 out of the 16 most actively traded currencies, as the latest UK unemployment data showed that the jobless rate amongst 16-24 year-olds is increasing at the fastest rate since records began in 1992.
Ian Stannard, senior currency strategist at BNP Paribas SA, said "the dollar is really reacting positively to the stronger data out of the U.S." The Pound slumped 1% to 1.5850 by the close of trading last night, while the UK currency was 0.4% lower versus the Euro. Sterling had previously advanced 3.4% against the Dollar over a nine day period, its longest winning streak since the beginning of August.
Earlier this week, the latest inflation data showed that consumer prices accelerated to 3.7% in December, faster than the 3.4% forecast, and the Pound rallied on speculation that the Bank of England will be forced to raise interest rates to combat rising prices. However, with slowing economic growth and rising inflation, the UK economy could be bound for a period of stagflation and officials are likely to refrain from a rate hike until absolutely necessary. ...Read more
Thursday 20 January 2011
The number of people out of work and receiving benefits fell by 4,100 in December
GBPEUR/GBPUSD
The Pound declined against the Euro and the U.S Dollar yesterday, after a report on the UK labour market dampened speculation that the Bank of England will begin to raise UK interest rates. The report from the Office of National Statistics showed that UK jobless claims dropped in December to the lowest level in 21 months, while the unemployment rate fell, as Britain's economic recovery maintained its pace at the end of the fourth quarter.
The number of people out of work and receiving benefits fell by 4,100 in December from the previous month. The surprising improvement in labour market conditions is probably temporary with up to 350,000 public-sector jobs is expected to be lost this year. The Pound endured a mixed reaction in the market following the release of the report, with investors split on whether it is too soon for the Bank of England to begin tightening policy.
The government is hoping that private-sector companies keep creating jobs over the next four years, despite the recent increase in VAT. Officials are warning that the budget cuts will curtail the pace of the economic recovery, while the highest inflation rate in eight months is adding pressure on the Bank of England to begin tightening monetary policy.... Read more
GBPEUR/GBPUSD
The Pound declined against the Euro and the U.S Dollar yesterday, after a report on the UK labour market dampened speculation that the Bank of England will begin to raise UK interest rates. The report from the Office of National Statistics showed that UK jobless claims dropped in December to the lowest level in 21 months, while the unemployment rate fell, as Britain's economic recovery maintained its pace at the end of the fourth quarter.
The number of people out of work and receiving benefits fell by 4,100 in December from the previous month. The surprising improvement in labour market conditions is probably temporary with up to 350,000 public-sector jobs is expected to be lost this year. The Pound endured a mixed reaction in the market following the release of the report, with investors split on whether it is too soon for the Bank of England to begin tightening policy.
The government is hoping that private-sector companies keep creating jobs over the next four years, despite the recent increase in VAT. Officials are warning that the budget cuts will curtail the pace of the economic recovery, while the highest inflation rate in eight months is adding pressure on the Bank of England to begin tightening monetary policy.... Read more
Thursday 13 January 2011
GBPEUR/GBPUSD
The Pound rallied to the highest level in almost a month versus the U.S Dollar yesterday, while the UK currency continues to test resistance around 1.20 against the Euro, after a report showed that a measure of inflation accelerated in December. The report from the British Retail Consortium showed that shop prices rose 2.1% from a year earlier, marginally up from 2% in November and the report adds to speculation that UK interest rates will be increased from the current record low of 0.5%.
Suggestions that the Central Bank will begin tightening monetary policy is hugely supportive to Sterling and once policy makers announce no change in rates today, the UK currency may struggle for some momentum. A separate report earlier in the day showed that the UK trade deficit unexpectedly widened in November, as demand from abroad subsided.
The gap in trade increased to £8.74 billion in November, from £8.6 billion the previous month. The export component of the report did offer some hope, as a weak Pound makes UK products more attractive. The UK currency has gained 1% in value over the course of this week on a trade-weighted basis, with eyes on the Bank of England rate announcement this lunchtime.....Read more
The Pound rallied to the highest level in almost a month versus the U.S Dollar yesterday, while the UK currency continues to test resistance around 1.20 against the Euro, after a report showed that a measure of inflation accelerated in December. The report from the British Retail Consortium showed that shop prices rose 2.1% from a year earlier, marginally up from 2% in November and the report adds to speculation that UK interest rates will be increased from the current record low of 0.5%.
Suggestions that the Central Bank will begin tightening monetary policy is hugely supportive to Sterling and once policy makers announce no change in rates today, the UK currency may struggle for some momentum. A separate report earlier in the day showed that the UK trade deficit unexpectedly widened in November, as demand from abroad subsided.
The gap in trade increased to £8.74 billion in November, from £8.6 billion the previous month. The export component of the report did offer some hope, as a weak Pound makes UK products more attractive. The UK currency has gained 1% in value over the course of this week on a trade-weighted basis, with eyes on the Bank of England rate announcement this lunchtime.....Read more
Saturday 8 January 2011
GBPEUR/GBPUSD
The Pound declined for a second day against the U.S Dollar, slipping back under $1.55, while the UK currency also lost ground versus the Euro, after UK service industries unexpectedly contracted in December for the first time in more than 18-months. The slump in service sector growth follows a separate report earlier in the week from the Chartered Institute of Purchasing and Supply, which also showed that construction had slipped into negative territory in December.
The reports combined show that the UK gross domestic product would have lost roughly 0.3% in the fourth quarter. The aneamic growth rate in the UK would lead to speculation over a second recession and ultimately suggestions that the Bank of England will need to extend bond purchases beyond the current level. The data yesterday was much worse than expected and the Pound declined against almost all of the 16 most actively traded currencies. ...Read more
The Pound declined for a second day against the U.S Dollar, slipping back under $1.55, while the UK currency also lost ground versus the Euro, after UK service industries unexpectedly contracted in December for the first time in more than 18-months. The slump in service sector growth follows a separate report earlier in the week from the Chartered Institute of Purchasing and Supply, which also showed that construction had slipped into negative territory in December.
The reports combined show that the UK gross domestic product would have lost roughly 0.3% in the fourth quarter. The aneamic growth rate in the UK would lead to speculation over a second recession and ultimately suggestions that the Bank of England will need to extend bond purchases beyond the current level. The data yesterday was much worse than expected and the Pound declined against almost all of the 16 most actively traded currencies. ...Read more
Thursday 6 January 2011
The Pound declined for a second day against the U.S Dollar
The Pound declined for a second day against the U.S Dollar, slipping back under $1.55, while the UK currency also lost ground versus the Euro, after UK services industries unexpectedly contracted in December for the first time in more than 18-months. The slump in service sector growth follows a separate report yesterday from the Chartered Institute of Purchasing and Supply, which also showed that construction had slipped into negative territory in December.
The reports combined show that UK gross domestic product would have lost roughly 0.3% from the third quarter. The aneamic growth in the UK would lead to speculation over a second recession and ultimately suggestions that the Bank of England will need to extend bond purchases beyond the current level. The data this morning was much worse than expected and the Pound declined against almost all of the 16 most actively traded currencies....read more
The Pound declined for a second day against the U.S Dollar, slipping back under $1.55, while the UK currency also lost ground versus the Euro, after UK services industries unexpectedly contracted in December for the first time in more than 18-months. The slump in service sector growth follows a separate report yesterday from the Chartered Institute of Purchasing and Supply, which also showed that construction had slipped into negative territory in December.
The reports combined show that UK gross domestic product would have lost roughly 0.3% from the third quarter. The aneamic growth in the UK would lead to speculation over a second recession and ultimately suggestions that the Bank of England will need to extend bond purchases beyond the current level. The data this morning was much worse than expected and the Pound declined against almost all of the 16 most actively traded currencies....read more
Wednesday 5 January 2011
GBPEUR/GBPUSD
The Pound rallied above 1.56 against the U.S Dollar yesterday, after a report from the Bank of England showed that UK mortgage approvals unexpectedly increased in November. Sterling was up 0.7% from the low of the day and strengthened 0.6% versus the Euro, as lenders granted 48,019 loans to buy property in November.
Elsewhere, the Pound also received a much-needed boost, as a report from the Chartered Institute of Purchasing and Supply said that a gauge of UK manufacturing expanded at the fastest pace in 16-years in December. A weak Pound has increased demand for UK exports, suggesting that the economic recovery remained on track as 2010 drew to a close.
Hetal Mehta, an economist at Daiwa Capital Markets Europe, said that "the manufacturing sector has long been expected to lead the recovery on the back of a weaker exchange rate. 2011 could well be the year that this expectation becomes a reality." New orders also rose at the fastest pace since May, led by the increased demand in UK exports....read more
The Pound rallied above 1.56 against the U.S Dollar yesterday, after a report from the Bank of England showed that UK mortgage approvals unexpectedly increased in November. Sterling was up 0.7% from the low of the day and strengthened 0.6% versus the Euro, as lenders granted 48,019 loans to buy property in November.
Elsewhere, the Pound also received a much-needed boost, as a report from the Chartered Institute of Purchasing and Supply said that a gauge of UK manufacturing expanded at the fastest pace in 16-years in December. A weak Pound has increased demand for UK exports, suggesting that the economic recovery remained on track as 2010 drew to a close.
Hetal Mehta, an economist at Daiwa Capital Markets Europe, said that "the manufacturing sector has long been expected to lead the recovery on the back of a weaker exchange rate. 2011 could well be the year that this expectation becomes a reality." New orders also rose at the fastest pace since May, led by the increased demand in UK exports....read more
Tuesday 4 January 2011
GBPEUR/GBPUSD
Following on from last week, the Pound bounced back against the U.S Dollar for the first day in three days on Thursday, as an improvement in global risk appetite continued with oil prices reaching the highest level in over two years, reducing the demand for the Dollar as a haven. A lack of demand at the U.S Treasury auction also reduced demand for the U.S currency, which weakened from a near-four month high against the Pound.
The UK currency remained relatively unchanged against the Euro, trading around 1.16 for the majority of the session. The Pound found support close to $1.5350 against the Dollar and advanced strongly to a high above $1.55 later in the U.S session. The UK currency gained support primarily from a weaker Dollar, as fundamental confidence remains fragile. There was also some evidence of corporate year-end demand for Sterling with some increase in fund weightings.....read more
Following on from last week, the Pound bounced back against the U.S Dollar for the first day in three days on Thursday, as an improvement in global risk appetite continued with oil prices reaching the highest level in over two years, reducing the demand for the Dollar as a haven. A lack of demand at the U.S Treasury auction also reduced demand for the U.S currency, which weakened from a near-four month high against the Pound.
The UK currency remained relatively unchanged against the Euro, trading around 1.16 for the majority of the session. The Pound found support close to $1.5350 against the Dollar and advanced strongly to a high above $1.55 later in the U.S session. The UK currency gained support primarily from a weaker Dollar, as fundamental confidence remains fragile. There was also some evidence of corporate year-end demand for Sterling with some increase in fund weightings.....read more
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