Rates as of 08:35am:
Sterling to Euro
Yesterday the pound made slow gains throughout the day, recovering a cent against the Euro to close at around 1.17. The main news of yesterday was the ECB decision to hold rates at 1%, which was widely expected. At a news conference, ECB president Jean-Claude Trichet predicted that falling prices would be “short-lived”.
Eurozone consumer price inflation was negative in June for the first time. Mr Trichet also said the ECB’s plan to buy 60bn euros of company bonds would begin on 6 July and promised more details later. It was these comments that weakened the Euro and caused rates to climb back throughout the day. The fact that more money will be pumped into the EU economy is taken as a sign of continued problems in the EU.
Last week, he described the eurozone economy as being in “uncharted waters”, and the ECB offered 442bn euros in 12-month loans to banks. Earlier in the day yesterday Sweden, which is outside the eurozone although a trading partner, halved its key interest rate to 0.25%, which is the lowest since records began in 1907. The ECB last cut rates in May, when they were reduced to 1% from 1.25%. It has reduced rates seven times since last October, when rates stood at 4.25%.
What next for the pound? Well, rates are predicted to contiue to climb throughout the year, based on assumptions that the worst is over for the UK, and further bad news and further rate cuts are expected in the Eurozone. However, there will still be spiked to the downside and so if you need to purchase Euros in the next few months, its worth getting in touch to discuss the various currency tools we have available to help you get the maximum rate possible from the market.
Sterling to US Dollar
The US markets are closed today for a bank holiday, and so there is no economic data from the states. Yesterday we had non farm payrolls data, The number of jobs lost in the US last month came in at 467,000, which was much more than had been expected.
The jobless rate rose to 9.5% in June, from 9.4% in May, as the US economy continued to struggle. The non-farm payrolls number would usually be released today, but was announced a day early because US markets will be closed today.
Very light today. All we have from the UK is some data from the bank of England that shows measures the value of new loans secured on housing. We also have services PMI. This captures an overview of the condition of sales and employment. It is worth noting that the UK service sector does not influence the pound as much as the Manufacturing PMI does.
For the EU, we have Retail Sales data which shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending.
That’s it for this week folks. Enjoy your weekend, and if you have any questions about this report, or would like to know anything about a currency not mentioned here, just get in touch below.
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