3rd November 2010
Good morning. The pound fell against the Euro yesterday, after better than expected EU PMI figures. Against the USD, Sterling remains above $1.60 due to markets awaiting the news of US QE. Today we’ll have a detailed look at GBP/EUR and GBP/USD and where rates may move next. First, the usual snapshot of rates as at 08:30am:
- GBP/EUR 1.1425
- GBP/USD 1.6046
- GBP/AUD 1.6075
- GBP/NZD 2.0732
- GBP/CAD 1.6174
- GBP/CHF 1.5691
- GBP/ZAR 11.010
- GBP/JPY 129.33
- GBP/NOK 9.3703
- EUR/USD 1.4038
Pound vs Euro
The euro rose 1 percent on the day versus sterling on Tuesday, boosted by demand from a European sovereign account, and as sterling came under pressure on soft UK construction activity data. Better Purchasing Managers Index (PMI) data from the EU was also higher than expected, strengthening the Euro and pushing exchange rates down by around 1%.
So, the Euro is getting stronger and Sterling is still very susceptible to any negative data. With tomorrows Bank of England interest rate decision, along with further UK data, and further poor figures could easily drag Sterling down further. If however no Quantitative Easing is announced by the BoE, then Sterling could recover.
If you need to buy or sell Euros, contact us to discuss our Stop Loss orders. This is where you can place a level below the current rate, and if markets drop below that level, we will automatically buy/sell your currency for you. This way you can aim for a higher rate, but have a safety net should data move rates against you.
Pound vs US Dollar
The USD has been weakening recently, helping to push exchange rates back through the $1.60 level. The reason for the weakness is the US mid term elections where the Republicans have a majority in the house of representatives.
This means that the President will have to make many compromises to push things through the house, and this is going to hinder the economic recovery due to the differing of opinions meaning legislation may be blocked.
Also weakening the US Dollar is the expected announcement of further Quantitative Easing from the US. Unlike the UK where we’re unsure if and when more QE will be announced, in the US it’s simply the case of whether it will be $500bn or $1tn that will be created to stimulate the economy.
This may create short term spikes, so a Limit order is useful if you’re buying US Dollars. This is where you can place an upper level above the current rate, and if the market spikes to that level we’ll buy your currency, 24/7. This means you can take advantage of what are often very short term spikes.
Shop Price Index and Service PMI are the main UK releases. From the EU and Germany inflation data is released. In the US we have an interest rate decision, but unlike Australia the current climate means they will probably leave rates at 0.25%. Watch however for the amount of QE they announce, as this will affect GBP/USD rates.
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.