An Overviewof current Foreign Exchange Market

The Pound became weak after a Halifax survey revealed that the house prices had their biggest yearly fall in over a year. House prices fell -1.4% in the month of May when it was actually expected to increase to about 0.1% in April. Also, it was expected to see a fall of -3.0%. However, the quarterly rate revealed a fall of -3.7% up to April. The cause of the fall was caused by weak confidence in the economy. There were various other reasons for the fall such as negative wage growth, increasing levels of debt and inability to acquire credit.

The value of Sterling is a matter of concern for most businesses and households. Travelling abroad has become difficult because it has now become expensive. The main reason is due to the drop in value against other major currencies like the dollar and euro. However, UK exporters have accepted this weaker Pound situation because they have come to an understanding that this weaker Pound scenario makes their goods cheaper to foreign markets.  Economists consider this weakening of Sterling situation as much needed correction to the present UK’S trade imbalances.

The UK recovery continues to remain sluggish and fragile. Hence, the pound is not likely to bring a significant change in the market sentiment this week. Also, Bank of England faces rising price pressures while it maintains its recovery trend. Based on the interest rate expectations, the economic data will be predicted.

The Dollar moved ahead in strength because of the consequences of the following rumors of another sovereign debt crisis in Europe. It was also presumed that Greece might need to reform its debt or just abandon the single currency. Since Greece head threatened to leave the Euro, there was a reversal situation caused in the market. The US Dollar index was in a mess after the US data. However, the EU news gave a boost to close up 1.1%.

Since, there has been a slow down in the economy’s growth pace in the US this year, it is doubtful to consider the payroll’s growth of 200K+ to be sustainable. The latest payroll news is considered as good news. However, the fact remains that the jobless rate outcome will still persist. In other words, the unemployment level will still exist around 9% for quite some time.