28th April 2011
Good morning. The Pound rose vs the Euro after GDP showed the UK returned to growth, however the gains have been reversed by this morning. Against the US Dollar, a downgrade in US growth forecast has weakened the US Dollar, and rates are touching a 17 month high. At 08:30am this morning rates are as follows:
- GBP/EUR 1.1233
- GBP/USD 1.6681
- GBP/AUD 1.5253
- GBP/NZD 2.0687
- GBP/CAD 1.5799
- GBP/CHF 1.4522
- GBP/ZAR 10.970
- GBP/JPY 136.18
- GBP/NOK 8.7875
- GBP/DKK 8.3727
- EUR/USD 1.4849
Sterling gains on GDP data
The UK economy grew by 0.5% in the first three months of the year, official figures have shown, reducing the risk of a double-dip recession. The chancellor welcomed the return to growth, which followed a contraction of 0.5% at the end of 2010. Economists gave a mixed response to the figures.
David Kern, the chief economist at the British Chambers of Commerce, said: “These figures were mixed and well below the Office for Budget Responsibility prediction that the economy would grow by 0.8% in the quarter.
The markets were pleased by the news, and Sterling rose against other currencies as a result. As the figures were so close to the forecast however, gains were limited and short lived and GBP/EUR rates are already back to where they started yesterday morning.
Pound nears 17 month high against US Dollar
The US Federal Reserve has cut its economic growth forecast for this year, citing weaker growth than expected in the first three months of the year. Chairman Ben Bernanke said he expected growth for 2011 to be between 3.1% and 3.3%, compared with the previous forecast of 3.4% to 3.9%.
This has weakened the already weak US Dollar significantly, making it cheaper to purchase. Rates are now close to $1.67 which is the highest in 17 months. This is despite the weak pound keeping GBP/EUR close to a 1 year low!
If you need to buy US Dollars, you can take advantage of the high even if you don’t need the currency for some time. A Forward contract allows you to lock in today’s rates for up to 2 years into the future, and only lodge 10% of the funds you need to convert. To find out more about these type of contracts, contact us today by clicking the banner below.
A survey from GFK is the only UK data of note. There are some employment figures from Germany, but yet again most data today is from the USA. Jobless Claims, Home Sales, Personal Consumption and GDP will all likely affect the value of the US Dollar.
As UK markets are closed for the Royal Wedding until next Tuesday, blog updates will continue on the 3rd of May.
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