Weekly Currency Report, and fundamental data

Good morning. As usual for a Monday, today we’ll review where rates moved last week vs the Euro, US Dollar & Canadian Dollar, and the outlook for Economic Data that may affect rates for the coming week.

Pound vs Euro

This past week has seen an abundance of data releases that affected exchange rates including; the positive manufacturing PMI results, which was higher than expected, but more crucially, the BoE and ECB interest rate decisions.

The fear was Mervyn King may sheepishly follow in Ben Bernanke’s footsteps with regards to QE and introduce the dreaded austerity measure into the UK, leaving Jean-Claude Trichet and the ECB smiling with their strengthened euro. However, whilst the BoE, indeed, decided to hold interest rates at its current level, as did Monsieur Trichet, they have put on hold QE… for now at least.

These more promising results and decisions, acted as the icing on the cake for our better than expected GDP Q3 figures, pushing the pound 4 points higher than its level just weeks before, creating the best currency rates for a week. So if selling euro, it may be worth taking advantage of the current level, as we could see the pound continue to gain strength.

After ten days of promising support for the pound, the week ahead has fewer prospects, other than manufacturing production, which forecasts suggest should remain at 0.3%. It must be noted, however, movement either way can tip the scales, and rates could fluctuate like a bungee.

Important figures to pay attention to if buying the euro are the GDP Q3 figures for Germany and the Eurozone, which previous quarters showed better than expected percentages. If the trend is anything to follow, we could see the euro regain it’s recently lost potency over the pound and the rates could correct themselves.

Pound vs US Dollar

With last week’s announcement by Fed chief Ben Bernanke that the US central bank would indeed pursue a second programme of quantitative easing, Sterling made gains against the Dollar. This was aided by the fact that the BoE declined to embark upon fiscal stimulus of its own until at least the New Year.

The US currency is faring rather better now that the so called ‘currency war’ has abated allowing the Dollar to strengthen slightly on the back of a more competitive global trade market. With China’s currency strengthening, the US is once again becoming a popular place to trade with and analysts believe that this can only a positive thing for the Greenback.

With little in the way of market moving data coming in the next week, it will be last week’s QE and interest rate decisions that are still the major players in the markets.

The fact that both central banks remained cautious and left rates as they were caused little fluctuation in the pairing but the $600bn which the US plans to slowly leak into its economy will make waves. Many investors are worried about this negative news and there is a fear that if the amount is misjudged the US could experience hyperinflation.

With little information coming from across the pond and Veteran’s Day keeping the markets closed, there should be limited volatility.

The quietness of the markets is emphasised by the fact that the most important set of data released in the UK will be September’s trade balance figures. The pound could strengthen slightly if the figures are better than forecast but they care still predicted to be well into the negative.

Pound vs Canadian Dollar

The Canadian Unit is closely aligned with Canadian commodity trade and as such is affected by the buying and selling power of its major exports such as its oil stores. Recently, Canada’s dollar traded equal with its U.S. counterpart for the first time in three weeks after reports showing that each of the nations’ economies added jobs last month bolstered global growth optimism.

The loonie, as the currency is often called because of the aquatic bird on the one-dollar coin, rose for a seventh day and gained versus the euro and yen. The Canadian dollar is headed for a 1.8 percent gain this week for the fifth-best performance among the 16 most-traded currencies. Fellow commodity exporters Australia and New Zealand are the two top gainers, after crude oil rose to the highest in more than two years.

This week’s data

Below we list the main economic releases for the coming week that will likely impact on any foreign money exchange you may need to do. Tuesday is the most important day for Sterling as we have a raft of economic data released. Recent weeks have shown that any data good or bad can very quickly push exchange rates up or down. If you need to secure currency with Sterling, ensure you have contacted us before Tuesday to discuss how the releases may affect the cost of your currency purchase.

Last week we correctly predicted the currency movements on the back of the Bank of England decision to hold Quantitative Easing, and getting the timing right can save you thousands of pounds on a currency transfer. Take advantage of the expert knowledge we offer by contacting us today, and help us help you make the most of your currency by achieving the best currency rates.

A fairly quiet day for data releases, with the main release being the German Trade Balance Data. This is the total balance between imports and exports, and as Germany is the largest economy in the EU, it can affect GBP/EUR rates. Also from Germany we have Industrial Production figures showing how this sector is performing.

In contrast to Monday we have a busy day today. For the UK, we have GDP estimate, House Price Data, Industrial & Manufacturing Production and Trade Balance data. With so much being released, we expect a volatile day for the pound. If the above releases come in above forecast, expect the pound to gain. If figures are worse than expected however, expect big falls for the pound.

Today is US Focused, with releases outlining Import Prices and Jobless Claims. The USD is very weak at the moment creating the best buying levels for 9 months. If the above data is good, then expect a reverse of this trend and rates to fall back below $1.60.

US Markets are closed for Veterans Day (Remembrance Day). The only release of note being a Monthly report from the EU.

German and EU Gross Domestic Product are the most important releases. This will show how the EU economy is growing, and may affect the value of the Euro. Also from the EU we have industrial production, so we expect some volatility for GBP/EUR rates today.

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.

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