Skip to content

British pound performance mixed as an influx of data hits the wires

As fully expected by all market participants the Bank of England kept interest rates at their record low yesterday and they are likely to stay at this level for at least the rest of this year as the economy still struggles to gain any sort of momentum. A steady flow of disappointing economic data had meant the no change vote was a forgone conclusion and on the back of the decision there was no market reaction. Interest rates have stood at their 0.5% level since March 2009 when a deep recession and the threat of deflation meant that central banks around the world had to slash their interest rates to record lows. Since then ( as we all know ) inflation has continued to soar past the banks target of 2% but unfortunately for the B.O.E their hands are tied as the economy is already feeling the pain of the government’s fiscal tightening. While inflation currently sits around the 4.5% area and looks likely to climb beyond 5% worries about persistently weak growth has now led to some M.P.C members calling for additional asset purchases to pump money into the economy. In June two of the policymakers voted this way, one for more stimulus and the remaining members votes for a status quo. The markets will watch with much eagerness to see how yesterdays vote went when the breakdown is published in two weeks time.
 Data 09.30: PPI Input m/m            
The European Central bank did not disappoint yesterday as they raised rates yesterday for the second time this year and at the same time signalled further policy tightening was in store as they aim to tackle inflation despite the euro zone’s intensifying debt crisis. At the same time they offered a helping hand to Portugal after their downgrade by Moody’s on Monday as they said that they are committed to keep providing it with liquidity. “ We will continue to monitor very closely all developments with respect to upside risks to price stability “ Trichet told a press conference following the 25 basis point increase to 1.5% and this looks likely to signal a further rate rise in 2011 and this is expected to be seen at some stage during the last quarter. The markets will be keeping a close on the euro zone as recent data has generally disappointed. The latest industrial orders rose less than expected while growth in the bloc’s dominant service sector has also slowed sharply.
Data No major data today    


All eyes will be focused across the pond today as U.S. Non-Farm payrolls are expected to increase another 105k in June following the 54k expansion seen the previous month. This faster pace of growth could well spark a bullish reaction in the greenback as the data should instill an improved outlook for the world's largest econ¬omy. A positive development could lead currency traders to increase their appetite for yields and the dollar may trade heavy going into the end of the week as market sentiment improves.
Data 13.30: Non-Farm Employment Change            
• The Australian Dollar and Canadian Dollar were the strongest currencies in the Asian and European sessions as strong data across the globe boosted appetite for risk.    


For more information or to request a call back click here


GBP/USD                        1.5992

GBP/EUR                        1.1190

EUR/USD                        1.4290

GBP/JPY                         129.43

GBP/AUD                        1.4904

GBP/NZD                         1.9326

GBP/ZAR                         10.7445

GBP/CHF                         1.3411

GBP/CAD                        1.5433

GBP/SGD                        1.9601

GBP/THB                         48.48

GBP/HKD                        12.4437


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

John Paul Georgiou

Senior Foreign Exchange Broker

+44 (0) 20 7959 6917


For more information