9th November 2010
Good morning. Sterling rose to a 5 week high against the Euro yesterday worries about euro zone debt dented the single currency. Sterling lost some ground against the dollar which was lifted on short covering. We have lots of UK data today that could change things, which we’ll cover below in a moment. First, rates at 08:30am this morning are as follows:
- GBP/EUR 1.1630
- GBP/USD 1.6094
- GBP/AUD 1.5950
- GBP/NZD 2.0538
- GBP/CAD 1.6201
- GBP/CHF 1.5511
- GBP/ZAR 11.035
- GBP/JPY 130.04
- GBP/HUF 320.03
- GBP/NOK 9.4094
- EUR/USD 1.3838
Sterling vs Euro at 5 week high
Worries about Irish debt have weakened the Euro making it cheaper to purchase. Coupled with the better UK data of late, and the result is the best exchange rates to buy Euros in 5 weeks.
Markets now look ahead to Wednesday’s inflation report from the Bank of England. It will include the BoE’s latest growth and inflation forecasts. A news conference with Governor Mervyn King will be watched for clues as to how seriously the monetary policy committee considered more quantitative easing last week, following the U.S. Federal Reserve’s decision to inject $600 billion in extra stimulus into the U.S. economy.
Given that the BoE want to weaken the pound to boost exports, as our Dealing director discussed with an MPC member recently on CNBC, then it could be this run of strength for the pound may be short lived.
Rates have risen 5 points in just a few weeks, and so if you need to buy Euros, consider either a Forward contract to lock in rates now, or alternatively consider a Stop Loss order. this is where you can place an order to buy should rates fall below a pre-agreed level. in this way, you can still aim for a higher rate while having a safety net should rates drop.
We have lots of data today that could bring an end to the run of strength in the pound. See below for more details.
Pound vs US Dollar
Last week we hit a 9 month high vs the US Dollar, with rates climbing above $1.60. Better non-farm payrolls data on Friday however strengthened the dollar and pegged rates back slightly. Again given the host of data we have today and tomorrow, Sterling movements may be the main driver in GBP/USD rates in the coming days.
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 releases come in above forecast, expect the pound to gain. If figures are worse than expected however, expect big falls for the pound.
Below we list the UK data that is released at 09:30am, and the forecast figure. Numbers below these forecast will probably result in rates falling. If rates come in above however, we could see rates gain. The GDP estimate will also be released today.
- 09:30 UK Industrial Production (MoM) (Sep) 0.4%
- 09:30 UK Industrial Production (YoY) (Sep) 3.6%
- 09:30 UK Manufacturing Production (MoM) (Sep) 0.2%
- 09:30 UK Manufacturing Production (YoY) (Sep) 4.9%
- 09:30 UK Total Trade Balance (Sep) -£4.500
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