Pound hits 13 month low vs Euro

4th May 2011
Good morning. Sterling fell to its lowest in over 1 year against the Euro yesterday, and also fell against the dollar after disappointing UK manufacturing data prompted investors to push back forecasts of a UK interest rate rise. At 08:30am this morning rates are as follow:

  • GBP/EUR 1.1112
  • GBP/USD 1.6512
  • GBP/AUD 1.5186
  • GBP/NZD 2.0775
  • GBP/CAD 1.5731
  • GBP/CHF 1.4231
  • GBP/JPY 133.74
  • GBP/ZAR 9.8280
  • GBP/NOK 8.6920
  • GBP/DKK 8.2850
  • EUR/USD 1.4858

Sterling falls on Manufacturing data

The UK’s manufacturing sector grew at its weakest pace for seven months in April, a survey suggests.”There was a dip in the output prices component, but it is still the third-highest index reading since the series began in 1999,” said James Knightley from ING Financial Markets.

“Consequently, the issue of weak growth and high inflation will continue to trouble the Bank of England (BoE). Given they have a mandate of targeting 2% inflation in two years’ time, the worrying outlook for growth favours patience from BoE policymakers.”

The data reduced the likelihood of an interest rate rise this week, he added. Due to the fact there is now less chance of a rate hike in the UK tomorrow, while in the EU they are braced for a series of hikes, the result is a weaker pound.

Sterling fell as a result to the lowest vs the Euro in 13 months.

Portugal reaches Bail out deal

Portugal’s caretaker prime minister Jose Socrates says he has reached agreement on a bail-out from the EU and the International Monetary Fund.he deadline for the bail-out money to be in place is 15 June, when Portugal has to repay nearly 5bn euros of debt.

Portugal was the third eurozone country to have to ask for a bail-out, after Greece and Ireland. Its economy is expected to contract this year as a result of the latest set of austerity measures.

As this now gives some stability to Portugal, there has been some slight strength in the Euro pushing GBP/EUR even lower this morning.

Today’s Data

UK data today comprises of mortgage approvals, Inflation data and lending info. From the Eurozone we see Retail Sales which are a barometer of consumer confidence. The US has inflation figures also in addition to employment figures. New Zealand has unemployment info in the evening and Australian Retail sales are released towards the end of the day.

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