US Dollar:
The dollar has continued to shed value against the majors as both the pound and euro take advantage of a sell off for the greenback. An impressive rally in global equity markets saw gains of between 1.8% and 3%. This saw an increase in risk coming into the market which saw the dollar and yen sold off in favour of higher yielding trades and funds flowing into the pound and euro. Dealers said news that the US manufacturing sector ex¬panded for a 12th straight month in July, beating most forecast, was a real boost. Investors are swinging back to a more optimistic view of the US recovery, based on the latest data, ahead of key US labour figures due Friday. Federal Reserve officials will consider a modest but symbolically important change in the management of their massive securities portfolio when they meet next week to ponder an economy that seems to be losing momen¬tum.
Data 13.30: Personal Spending, Personal Income. 15.00: Pending Home Sales 0.5% from –30.0%.
Pound:
Sterling has seen a surge against the majors this week which has held firm into Tuesdays session. A stellar start to the week for the pound against the dollar and euro has seen the $1.59 level and 1.2050 level hit respec¬tively. Sterling marched higher from the roughly 14 month low it hit in May, when investors worried political grid¬lock would stymie a plan to tackle the UK’s deficit. Since then, sterling has rallied more than 11% on the back of some stronger than expected UK data and a well received austerity plan under the new coalition government. Sterling, though a bit lower now, is seen benefiting as investors who had bet against the pound are forced to unwind their trades as UK economic data continue to generally surprise to the upside, pushing the pound higher. It is noted that the pound may be challenged to rally much further as UK growth is likely to begin to slow.
Data 09.30: Construction PMI 58.2 from 58.4
Euro:
The euro could rally modestly beyond $1.33 on the dollar as concerns over the regions sovereign debt crises continue to ease, but it will likely come under pressure again in the coming months as the regions belt-tightening austerity plans start to constrain growth. We wouldn’t downplay the euros gains, but we remain a little suspi¬cious. Against sterling, again we see a cancelling out a move higher as both currencies benefit from the fall in the value of the dollar. EUR/GBP has been moving in tight ranges, with sterling just nudging ahead over the last week or so.
Data 10.00: PPI m/m 0.4% from 0.3%
General:
• The Reserve Bank of Australia kept interest rates on hold for the third straight month today, giving bor¬rowers another few weeks of relief from rising mortgage repayments. The central bank held rates at 4.5%, where it has been since May.
• Oil prices are edging up Tuesday, staying above $80 a barrel amid buoyant market sentiment.
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| GBP/USD | 1.5953 |
| GBP/EUR | 1.2083 |
| EUR/USD | 1.3201 |
| GBP/JPY | 137.27 |
| GBP/AUD | 1.7549 |
| GBP/NZD | 2.1824 |
| GBP/ZAR | 11.6865 |
| GBP/CHF | 1.6550 |
| GBP/CAD | 1.6355 |
| GBP/SGD | 2.1573 |
| GBP/THB | 51.29 |
| GBP/HKD | 12.3851 red-down; blue-up (snap shot) |
These rates are for indication purpose
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker