2nd August 2010
Good morning. Sterling has strengthened to its highest against the euro in a month this morning, and has also gained against the US Dollar and other major currencies. The pound has been buoyed by higher equities in the wake of solid earnings reports that have lifted perceived riskier currencies. We’ll have a look at this in a moment, along with the weeks data. First, at 09:00am this morning rates are as follows:
- GBP/EUR 1.2066
- GBP/USD 1.5788
- GBP/AUD 1.7311
- GBP/NZD 2.1546
- GBP/CAD 1.6146
- GBP/CHF 1.6521
- GBP/NOK 9.503
- GBP/ZAR 11.431
- GBP/JPY 136.87
- EUR/USD 1.3081
Sterling is moving higher this morning due to a host of better UK data. Riskier currencies such as the pound are also benefiting due to higher equities. This week we see a host of UK and EU data that could affect Sterling to Euro rates throughout August. See below for how these releases may affect rates.
Pound vs US Dollar
Last week the dollar reached a 5 month low versus Sterling and a 3 month low against the euro as safe haven demand was reduced and confidence in global markets increased.
Sterling appreciated versus the dollar over concerns of a slowdown in U.S. economic activity, the dollar struggled as a surge in investor confidence and risk appetite pulled the greenback lower for most of the week.
Economic data during the week had added further pressure as the figures indicated support for recent speculation that the U.S. economy was indeed slowing. The U.S. GDP data was particularly significant as the drop in growth numbers sparked a Sterling rally as the week came to an end.
After the lower than expected growth figures for Q2 in the United States markets will be alert to any further signs of a slowdown in the U.S. economy.
This Weeks Data
As usual, below we list the main fundamental data releases for the week. The releases will affect you in different ways, depending which currency you need to buy or sell. So, contact us today for a free consultation on how these releases may impact your currency purchase. Fully informed of what may move exchange rates, you can make a decision on when to fix your rate, and which contract may be best for you to reduce exposure to adverse rate movements.
A free consultation is the first step to taking control of your currency purchase, and not allowing the markets to control you!
A host of manufacturing data is released to for the UK, EU and Germany. The manufacturing sector is a good indicator of the economy as a whole, and so GBP/EUR rates could be affected. Inflation data from the UK could give further clues as to when interest rates may rise.
An interest rate decision from Australia today. Rates have been rising of late, and a further hike could knock GBP/AUD rates down. Producer Prices from the EU today could also affect the value of the Euro. Late in the day consumer confidence for the UK is released. High confidence can stimulate economic expansion, and so if the figure is above 60 expect the pound to gain, and vice versa.
A raft of inflation data is released for the EU and UK today. High inflation means a good chance of higher interest rates, which would strengthen the relative currency. Retail Sales for the EU will also be watched closely. The changes are widely followed as an indicator of consumer spending. Unemployment data for the US rounds off the day.
As always for the first Thursday in the month, we have the UK and EU interest rate decisions. It’s expected that yet again rates will be left on hold. The ECB gives a speech shortly after though that could move GBPEUR rates depending if they are positive or negative about the economy.
An extremely busy day for fundamental data today. In the UK, we have a GDP estimate, Industrial and Manufacturing production figures, and inflation data. In the EU we have inflation and production figures. Later in the day we have unemployment and non farm payrolls for the US. We expect significant volatility during trading on Friday that could move rates either way.
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