Sterling remains weak.

Sterling gained against a broadly weaker euro on Thursday as European officials expressed discomfort over the single currency’s recent rise.The euro extended losses against the pound after European Central Bank President Jean-Claude Trichet said excess currency moves have adverse implications. Earlier in the week, he said it was “extremely important” to have a strong dollar. Rates however have already started to drop from yesterdays levels, and the dollar has also strenghtned, causing Cable to fall. At 08;30am rates stand as follows:

  • GBP/EUR 1.0919
  • GBP/USD 1.5871
  • GBP/AUD 1.8288
  • GBP/NZD 2.2276
  • GBP/ZAR 12.312
  • GBP/JPY 141.87
  • GBP/CAD 1.7290

UK House Prices
This morning we had the Nationwide House Price data. UK house prices have now recovered to the same level as a year ago, according to the latest Nationwide figures.
The average price of a home last month was equal to September 2008, it said.
The building society said that UK house prices rose by 0.9% in September compared with August, the fifth consecutive monthly increase.
Nationwide said the price rises suggested that the worst of the recession was over. But it warned the rate of price increases may now slow.

Eurozone Unemployment rises
The unemployment rate across the 16 countries that use the euro has risen again as the effects of the recession continue to be felt. August’s seasonally adjusted rate rose to 9.6%, compared with 9.5% in the previous month, official figures show. The number of people without a job in the eurozone is now 15.2 million.

Despite the fact that many eurozone economies are recovering from recession, economists expect unemployment rates to continue rising. This would usually mean a weaker Euro and higher exchange rates, however the state of the UK economy is a bigger factor, as so rates are still below the €1.10 level.

US Consumer Confidence Drops
US consumer confidence fell unexpectedly in September, suggesting Americans are not as convinced as US policymakers of an economic recovery. The closely-watched Consumer Confidence Index from the Conference Board business organisation slipped to 53.1 from a revised 54.5 in August. Economists were expecting confidence to improve after it rose in August.

Summary
Despite poor economic data from both the Eurozone and US that would usually cause rates to rise, exchange rates remain under pressure with the dollar not able to get through $1.60 and the Euro not able to get through €1.10. This is because the markets are waiting see how the Bank of England and UK Government will attempt to tackle the huge levels of government debt.

While this continues, rates will remain low. This may well be the case now until the general election, as the current governments policy of spending their way out of the recession is clearly not working, however they continue to follow this policy.

Enjoy your weekend.

Todays Data
UK – Nationwide House Prices
UK – PMI Construction
EU – Producer Prices
US – Non Farm Payrolls
US – Unemployment


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