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All eyes focus on Jackson Hole

Sterling hit a 3-1/2 month high against the dollar on Friday, putting it on track for its best weekly performance since mid-January, as investors wary about funding problems in the Eurozone and a recession in the US pre-ferred to buy the pound. But Britain’s own struggles with a patchy recovery, and prospects that the Bank of England could also resort to more quantitative easing is likely to keep a lid on gains. In an environment where investors are increasingly wary about sovereign debt risks, the pound drew some support from data which showed Britain’s public finances posting an overall surplus in July, pushing down overall borrowing this fiscal year and bringing the government closer to its fiscal targets. Sterling was up 0.6 percent at $1.6614, having hit a fresh 3-1/2 month high of 1.6618, before weakening to current levels of around 1.6500.
No major data due today.


Market sentiment remains weighed down into the new week and risk negative developments over the weekend have further contributed to the broad based liquidation flows. Most of these negative developments have come out from the Eurozone, where Belgian Finance Minister Reynders was quoted in a local newspaper saying that the current economic and financial strains were at least as bad as the 2008 banking crisis. Moving on, with the Eurozone so heavily in focus , economic data out of the region this week will take on an added meaning and we would look to Tuesday’s PMIs and German ZEW, and Wednesday’s German IFO and Eurozone industrial new orders for some more insight and clarity into the health of the beleaguered economy.
No major data due today.


Investors are waiting for signs of further stimulus from the Federal Reserve when bankers gather in Jackson Hole, Wyoming, later this week, one year after Chairman Ben Bernanke launched a second round of quantita-tive easing to revive the economy. Additional bond purchases by the Fed could help reflate asset prices, but many view the chances of a third round of quantitative easing as limited and expect the Fed to take gradual measures to boost the economy. From Friday’s opening of around $1.4300 against the euro, the dollar weak-ened to $1.4450 before recovering slightly to around the $1.4400 handle.
No major data due today.


• The New Zealand and Australian dollars advanced against the yen amid speculation the Federal Reserve will consider additional steps to bolster the US economy, supporting the demand for riskier assets.


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GBP/USD                        1.6480

GBP/EUR                        1.1450

EUR/USD                        1.4390

GBP/JPY                         126.40

GBP/AUD                        1.5825

GBP/NZD                         2.0125

GBP/ZAR                         11.8590

GBP/CHF                         1.2975

GBP/CAD                        1.6280

GBP/SGD                        1.9925

GBP/THB                         49.10

GBP/HKD                        12.8500

red-down; blue-up (snap shot)

These rates are for indication purposes only.

For more information or to get the latest spot rates contact:

John Paul Georgiou

Senior Foreign Exchange Broker

+44 (0) 20 7959 6917      


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