Pound remains firm despite BoE Comments

29th July 2010
Good morning. The US Dollar came under month end selling pressure yesterday, and has helped push GBPUSD rates through $1.56 which is the best for 5 months. Against the Euro, rates remain around the €1.20 level. At 08:30am this morning rates are as follows:

  • GBP/EUR 1.1994
  • GBP/USD 1.5627
  • GBP/AUD 1.7363
  • GBP/NZD 2.1547
  • GBP/CAD 1.6156
  • GBP/ZAR 11.402
  • GBP/CHF 1.6460
  • GBP/JPY 136.42
  • GBP/HUF 339.49
  • EUR/USD 1.3026

Pound remains firm

Despite comments from the Bank of England yesterday that interest rates would remain low for some time, the pound remains firm. Usually I would expect such comments to drive the pound down, however investors seem to be happy with the better UK data of late, and so there was no real sell off for Sterling following the comments.

Analysts said the overall tone of the BoE testimony suggested few policymakers for now would warm to the views of rate setter Andrew Sentance, who has argued for a rise in UK interest rates at the past two policy meetings.

Analysts said for now sterling sentiment would continue to be bolstered by speculation the UK economy will continue to recover and that the government will be more successful in cutting its budget deficit than some euro zone nations. Today however we have a raft of data that could change things.

Today’s Data

We have already had UK house price data that was slightly worse than expected, but the pound is little changed due to the reasons above. We have money supply data later that measures all the Sterling in circulation, but this is not likely to have a big impact on Sterling.

The main news today comes from the EU. We have unemployment data from Germany, along with EU wide measures of Confidence in the Industrial Sector, Services Sector and Economic confidence.

Of late the Euro seems to be weaker than Sterling, and so poor figures could push GBP/EUR rates higher. Good figures of course will have the opposite effect in bringing rates down.

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