19th October 2010
Good morning. Sterling fell against the Euro and US Dollar yesterday. The pound is weak due to this weeks Bank of England minutes, and the spending review due to be announced by the government tomorrow. Rates at 08:30am are as follows:
- GBP/EUR 1.1378
- GBP/USD 1.5833
- GBP/AUD 1.6027
- GBP/NZD 2.1019
- GBP/CAD 1.6151
- GBP/CHF 1.5202
- GBP/ZAR 10.951
- GBP/JPY 128.88
- GBP/NOK 9.2870
- GBP/PLN 4.4713
Sterling weak on BoE and spending review
Despite good house price data for the UK, analysts say the pound remained vulnerable ahead of the release of the UK government’s spending review on Wednesday, which is set to deliver the biggest public cuts in decades. We had a detailed look at what the Spending review might mean for the markets in yesterdays report.
That could renew speculation the Bank of England would opt for more quantitative easing to offset the adverse impact of fiscal tightening. BoE meeting minutes also due on Wednesday were expected to show policymaker Adam Posen had voted for more QE, which would be seen as a counterbalance to policymaker Andrew Sentance, who has voted for a rate increase since June.
“The comprehensive spending review could increase speculation of more QE in the UK, and the BoE minutes could see a move towards the dovish camp, which will put sterling under pressure,” said BNP Paribas currency strategist Ian Stannard.
Pound vs New Zealand Dollar
Over the past few weeks, we have seen the New Zealand Dollar strengthen back below the 2.10 mark, close to the lowest levels we have seen in over 30 years. The strong economy and high rate of interest are keeping the New Zealand Dollar very strong against all other majors.
The GBP/NZD is incredibly volatile, and we expect this to continue over the next week with all the upcoming data announcements this week in the UK. One way to ensure you don’t miss out on any market highs is to use Limit & Stop Loss orders, which put an automated order in the market at a set level, ensuring that if the market reaches your target, you do not lose out if the spike is short lived.
These orders run 24-hours a day, so as long as the exchange rate you are targeting can be obtained at some point, you will not miss out. With so much uncertainty surrounding the global economy and exchange rates, these orders give you a rare opportunity to secure temporary spikes in the market.
From the EU today, we have EU Construction Output along with German Economic Sentiment. From Canada, there is an Interest Rate decision. With world banks currently trying to keep currencies weak to help exports, we expect rates to stay at a 1% low.
If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what’s happening in the currency markets.