Pound falls, but likely to recover

Sterling
As outlined in yesterday afternoons update post, Sterling fell sharply against the euro and the dollar yesterday due to profit-taking. This follows recent sharp gains and after Bank of England policymakers remained very cautious on the UK outlook despite encouraging signs of economic recovery.

A 1.5% fall in UK equities and drops in the FTSE also dampened sentiment towards the pound as doubts whether the recent increase in optimism surrounding the UK was justified.

As I said yesterday, figures showing a much smaller than expected rise in UK unemployment failed to provide more than a very short-lived boost to sterling. In fact many currency blogs incorrectly said it was this rise in unemployment which caused the pound to fall. This was not the case, and Sterling actually rose slightly as the figures were not as bad as thought.

Any gains were short lived however, and the pound quickly tumbled to lows against the dollar and euro. It’s a mixture of the lack of confidence, and also the cautious note of the BoE minutes yesterday that caused the drop in the pound.

“Sterling has been coming off strongly, and the better jobs data failed to generate any interest,” BNP Paribas’s Ian Stannard said. “It also looks very much as though sterling has been dragged lower by a disappointing equities performance,” he added.

However core figures are still very strong for the UK. Often spikes in the market are followed by dips, and I believe this is what we saw yesterday. The pound has already started to climb slowly back up towards 1.18 against the Euro this morning.

Todays Data

UK
At 09:30 we have Money supply data, also Retail Sales which will show how the high street is performing and give us an idea of consumer confidence. We expect to see month on month figures to show a rise of 0.5%, while the year on year should be a drop of about 0.1%. Watch for the news at 09:30 – if figures are higher than this, expect Sterling exchange rates to climb, and vice versa.

EU
Not much. We have already had the Swiss interest rate decision this morning, where rates were left on hold at 0.25%

US
Jobless data, and also a speech by theTreasury Secretary on how he observes the current US economy. Leading Indicators data also this afternoon, which measures future trends of the overall economic activity including employment, average manufacturing workweek, initial claims, permits for new housing construction, stock prices.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog

Email Me

Open a free Trading Facility

Open an online Trading Account


Foremost Currency Group

Leave a Reply

Your email address will not be published. Required fields are marked *