Mixed day for Sterling as Unemployment/IMF drive markets

Thursday 19th January 2012
Good morning. It was a mixed day in the currency markets yesterday. Initially poor UK unemployment pushed Sterling lower against the Euro. However, as reports suggested the International Monetary Fund was proposing to boost its lending resources, this supported the euro and riskier currencies, pushing the Pound up later in the day. Below shows how GBP/EUR and GBP/USD moved yesterday:

~Currency Movements on Wednesday 18th January~

UK Unemployment figures disappoint

Figures released yesterday show that UK unemployment rose by 118,000 in the three months to November to 2.685 million. The Office for National Statistics (ONS) said the unemployment rate also rose to 8.4% from 8.3%, the highest since January 1996.

The numbers were slightly lower than analysts had forecast, and support the picture of a flat UK economy, with other data released on Wednesday showing average weekly earnings, including bonuses, grew at just 1.9%.

This pushed Sterling lower against other currencies as the Pound weakened.

IMF Bailout strengthens the Pound

Also yesterday, Bloomberg News reported that the IMF was planning a large expansion in its lending pool to safeguard the global economy against the worsening euro zone debt crisis. This supported riskier currencies, and caused both the Pound and the Euro to gain against other currencies. Also helping the Euro was a report that Italy was unlikely to default.

This was the main driver in exchange rates yesterday. The news meant investors were a little more confident in the Eurozone, and this caused the Dollar to weaken as money was moved away from the safe haven Dollar.

The net effect was Sterling/Dollar rates climbing, and Sterling/Euro rates climbing slightly. Euro rates didn’t go up as much due to a strengthening of the Euro.

Emigrating to Australia?

Australia remains the top destinations for Brits emigrating abroad. Unfortunately the Aussie Dollar has been getting stronger and stronger in recent years, becoming more expensive to purchase. This is because they largely avoided the global recession and retain high interest rates relative to other countries.

Rates yesterday hit a new low, with rates briefly at their lowest in over 20 years. While this is not good news for anyone who has recently emigrated down under, those looking to bring AUD back to Sterling have not had it so good in a long time. Regardless if you need to buy or sell this currency, contact us today to discuss how we can protect you against rates moving against you.

Today’s Data

Unusually for a Thursday, there is no UK data being released. The ECB will give a monthly report on the health of the EU economy, and Australia releases various measures of unemployment. Most data today is US based however; Inflation Data, Jobless Claims, Building Permits, and Manufacturing data.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

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