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China consumer prices ease to see Aussie and Kiwi dollars decline

Pound Thursday saw the pound open the morning session in a gloomy mode as a week low of 1.1306 was printed in GBP/EUR and a 2 month low of $1.5912 was printed in cable. The turn around for the pound came as the Bank of England kicked off the afternoon session announcing as expected, to keep interest rates un-changed at 0.50%, but it was their decision to maintain their asset purchase facility target at £200bn which dis-appointed those who had predicted more QE and the unwinding of such positions saw the sell-off in the gilt market as sterling rallied across the board. The pound took a cent off the single currency which gained momentum for GBP/EUR as currency markets digested the ECB rate decision and subsequent press conference which produced a negative view on the euro. This morning has seen the pound hold onto those gains in GBP/EUR as 1.15 was breached. In the value of cable, we did see the end of the day close negative as global markets awaited Obamas speech regarding a new stimulus package, which in the run up saw caution hit markets as the dollar rallied. The outcome was mixed for the pound as after the stimulus was announced, the fall in GBP/USD was cushioned to an extent but the damage was already done.
Data: 09.30: PPI Input m/m & PPI Output. 10.00: CB Leading Index m/m.


Euro: The euro suffered badly in global currency markets yesterday as the ECB rate decision and accompanying press conference saw the single currency sold off across the board. Speaking to reporters after the ECB had left its main interest rate unchanged at 1.5%, ECB president Jean-Claude Trichet said underlying momentum in the eurozone economy appeared to be dampening. He blamed this on the eurozone debt crises and weakening global growth. Mr Trichet said ECB staff had lowered their growth forecasts to around 1.6% this year and 1.3% next year. He said the risks to the economic outlook are “to the downside”, mainly due to particularly high uncertainty. Mr Trichet said inflation rates were likely to stay above the banks 2% target in the coming months, but should fall below 2% in 2012. he said price risks were “broadly balanced”. That assessment marked a change from last month, when he said there were “upside risks to price stability”. The change in the ECB’s inflation view suggests it has abandoned its policy tightening course and that interest rates are now on hold. Not only has the economic outlook for the eurozone clouded over and investor moral is falling, but fears that Greece is on the brink of bankruptcy refuse to go away. All signs to sell the euro then! Data already out: French Budget Balance came in much worse than expected at –€86.6bn from -€61.3.


Dollar: A pretty strong day for the dollar yesterday as it sat back and let the BoE and ECB do all the work. The greenback did suffer a little in the wake of no more new QE in the UK, but this was soon taken back in the run up to the Obama speech which saw caution spread through global markets. The dollar continued its relentless march against an under fire euro, as a bearish tone was sent out by Trichet to weaken the single unit. This saw EUR/USD fall two cents in the dollars favour. After the Obama speech the dollar declined against most of its major peers as President Obama unveiled proposals to create jobs and boost the US economy, dampening demand for safer assets. We can say that Obamas plan is seen favourably in the market, boosting risk appetite and spurring selling of the dollar. No major data.


• Chinas consumer prices eased last month, trimming the Aussie and Kiwis currency strength.
• G7 Meeting starts attended by finance ministers and central bankers from 7 industrialised nations.


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GBP/USD                        1.5978

GBP/EUR                        1.1510

EUR/USD                        1.3879

GBP/JPY                         123.93

GBP/AUD                        1.5063

GBP/NZD                         1.9157

GBP/ZAR                         11.5317

GBP/CHF                         1.3958

GBP/CAD                        1.5802

GBP/SGD                        1.9501

GBP/THB                         47.96

GBP/HKD                        12.4450

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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