Pound Sterling has managed to halt this weeks slide against the euro, for now at least as Greek worries in the eurozone area again take hold. We have now seen the pound give up over one and a half cents versus the single currency as UK economic data drags sterling down. Today may be crucial for where GBP/EUR goes for the rest of the week as the market awaits the outcome of the conference call scheduled today between Merkel and Sarkozy. The value of cable is a different kettle of fish as the greenback continues to benefit from risk aversion and higher yielding currencies sold off as global players seek a shelter for their funds. Bank of England policy maker Adam Posen’s signal that he may need to double his call for bond purchases will intensify the debate in the UK for more stimulus as the economy falters. The central bank bought £200bn of bonds in a program that ended in early 2010. Posen’s comments may point to a further shift in the MPC just two months after Spender Dale and Martin Weale abandoned a push for higher interest rates to control inflation that accelerated to 4.5% in August. The NIESR said last week economic growth slowed to 0.2% in the three months through August. Unemployment claims probably rose 35,000 last month, due today. The run of news in the UK has been worse than expected and analysts are looking for more QE as early as next month. All sterling negative!
Data: 09.30: Claimant Count Change 34.8k from 37.1k.
Euro: The euro rose from almost the lowest level against the dollar since February as stocks gained, spurred by a recovery of French banks shares and stronger investor demand. The 17 nation currency weakened earlier after German Chancellor Angela Merkel and French President Nicolas Sarkozy failed to announce joint initiatives on the regions debt crises, as speculation said they would. French banks advanced after dismissing concern about access to funds. There’s been an aggressive turnaround in sentiment toward French banks, a rea¬son why the euro is holding at these levels. The euro looks a bit stronger but all the issues and problems that got us here have not gone away. Greece’s Prime Minister is coming under fresh pressure from Europe to en¬sure his beleaguered government delivers new austerity measures to trigger the release of an €8bn bailout loan. Amid mounting international anxiety about this country’s precarious financial position, the Greek PM will speak by teleconference call this evening with the German chancellor and French president. Tomorrow see’s Spain scheduled auction of securities maturing on 2019 and 2020. Data 10.00: Industrial Production 1.5% from –0.7%. Scheduled conference call between French President and German chancellor later today.
Dollar: The dollar has continued its relentless march against both the pound and euro this week and has been given a boost after better than expected US data yesterday. The ongoing eurozone debt crises is keeping the greenback well bid as fears of Greek default remain, making investors turn into safe-haven plays. US stocks posted gains while their European and Asian cousins posted losses, highlighting the international mood which can be just as easily seen in the currency graphs of the dollar, euro and pound. The dollar has now hit an eight month high against sterling as the $1.57 handle was tested this morning. A small recovery for the euro was seen yesterday, but EUR/USD is still pointing to the downside and most currency analysts are still looking for the dollar to break through the $1.36 level again, this week. Data 13.30: Core Retail Sales m/m 0.2% from 0.5%, PPI m/m –0.1% from 0.2%, Retail Sales m/m 0.2% from 0.5%, Speaker:13.30 Treasury Secretary
General:
• Asian currencies weakened, led by South Korea’s won as concern the regions economic growth is slow¬ing and Europe’s debt crises is worsening sapped demand for emerging market assets.
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GBP/USD 1.5728
GBP/EUR 1.1512
EUR/USD 1.3657
GBP/JPY 121.04
GBP/AUD 1.5356
GBP/NZD 1.9164
GBP/ZAR 11.6080
GBP/CHF 1.3865
GBP/CAD 1.5574
GBP/SGD 1.9611
GBP/THB 47.59
GBP/HKD 12.2803
red-down; blue-up (snap shot)
These rates are for indication purposes only.
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