22nd September 2010
Good morning. Sterling hit a two-month low against the euro on Tuesday as the single currency rose on robust investor demand for Irish and Greek government paper, which eased concerns about euro zone peripheral sovereign debt. Rates as at 08:30am are as follows:
- GBP/EUR 1.1794
- GBP/USD 1.5690
- GBP/AUD 1.6406
- GBP/NZD 2.1270
- GBP/CAD 1.6076
- GBP/CHF 1.5575
- GBP/ZAR 11.001
- GBP/JPY 132.93
- GBP/NOK 9.317
- EUR/USD 1.3298
Pound falls against Euro
UK Public Sector borrowing was higher than expected, which caused the pound to fall. The drops against the Euro were the biggest, due to the single currency strengthening following a robust auction which showed growing support for the EU currency.
UK Recovery to be slower than thought
The UK’s economy will recover more slowly than previously thought next year, business group the CBI has predicted. It expects GDP to grow by 2% in 2011, not 2.5% as forecast in June this year. Spending cuts aimed at getting public finances into better shape had prompted the revision, the CBI added.
The news has pushed the pound lower. Spending cuts are in the news lately, and it’s having a mixed effect on the pound. On the one hand, as stated above the cuts have meant growth forecasts have been cut. On the other hand, the cuts have meant the UK has retained it’s AAA credit rating, which has helped support the pound.
Going forwards, it’s likely to be further data that will drive Sterling exchange rates. Today’s data is listed below:
The Bank of England minutes are the most important release of the day. The minutes give a full account of the policy discussion, including differences of view. It’s usually a big mover for the pound. Rates were left on hold, and the minutes will show how the members voted. Most analysts expect the vote to be 8-1 to have held rates.
If it shows that more than 1 voted for a rate increase, the pound may climb. If not, we could see the current trend continue and the pound to fall.
From the EU, industrial orders will show how that sector is performing. Retail Sales from Canada and GDP from New Zealand round off the day
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