Sterling falls against USD and EUR

Last Weeks Trading
The pound steadied on Friday as speculative traders took some profits following its losses on Thursday when dismal US non farm payrolls increased risk aversion and pushed the pound to a 1 week low versus the USD.

After the much anticipated employment figures and an interest rate meeting by the European Central Bank on Thursday, the U.S. markets were closed for the Independence Day holiday. Trade was thin therefore on Friday.

The pound offered little reaction to data showing a slight fall in activity in the UK services sector, as the figure remained in growth. Sterling, as is often the case, was driven by moves in the US.

This Week
This morning, the pound has started to tumble. Sterling to US Dollar has already plummeted, and rates for Euro are also much lower than Friday.

Cable is falling strongly against Dollar in the early European morning and the pair has fallen around 200 pips in the last two hours from 1.6330 to trade close to 1.6130 and to post 3-week low at 1.6135. Currently the pair is falling 1.15% so far today from opening price to the current 1.6140/50.

As at 08:50am:

  • GBP/EUR 1.1588
  • GBP/USD 1.6146
  • GBP/AUD 2.0421
  • GBP/NZD 2.5765
  • GBP/CAD 1.8786
  • GBP/CHF 1.7605
  • GBP/JPY 153.68

Markets will be focussed on economic fundamentals, and we see more economic data and a policy announcement by the Bank of England. Sterling ended the week in negative territory against the dollar and the euro, also knocked by weak UK gross domestic product data earlier in the week.

Still, other figures showed that UK house prices and activity in the manufacturing sector were picking up slightly, suggesting that the economy may be improving. Sterling is set to end the week around 1 percent lower against the dollar after traders sold the pound after figures earlier this week showed the UK economy posted its biggest quarterly decline in 50 years in January-March.

On Friday, an index of UK services PMI, eased to 51.6 in June, offering a reading that was weaker than expectations for 52.0. The figure was a touch lower than 51.7 in May, but remained above the 50-market that denotes growth.

So, following a turbulent week last week for the pound, this weeks data will be watched closely. In recent times, the pound has climbed on the back of confidence that the worst is over for the UK economy. However, figures have contradicted this of late, causing the recent falls in Sterling.

The main data to look for from the UK, is tomorrow when we have measures of Industrial and Manufacturing production, in addition to a GDP estimate and consumer confidence. Thursday sees an interest rate decision by the Bank of England, and analysts will also look for any further measures of Quantitative Easing.

Elsewhere, German Trade Balance on Thursday is likely to affect the value of the Euro.

This Weeks Data
Monday
EU – Investor Confidence
NZ – Business Confidence

Tuesday
Aus – Interest Rate Decision
UK – Halifax House Prices
UK – Industrial Production
UK – Manufacturing Production
UK – GDP Estimate
UK – Nationwide Consumer Confidence
Ger – Factory Orders

Wednesday
EU – GDP
Ger – Industrial Production
US – Mortgage Applications
US – Consumer Credit

Thursday
Aus – Employment & Unemployment
Ger – Trade Balance

UK – BoE Interest Rate Decision
US – Jobless Claims

Friday
UK – Producer Price Index
Can – Unemployment
US – Import Prices
US – Trade Balance

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