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Dollar Surges as the market flees the Euro

Pound: We saw a nice move for Sterling yesterday against the Euro as it opened the days session around the 1.1365 area and it more than held its own as it closed the UK trading day trading at 1.1420. This move has held over-night and we start today sitting around the 1.1450 area. Unfortunately the same could not be said of the moves in cable. From an opening area of 1.6350 we closed at 1.6210 and start this morning at 1.6165. These moves are on the back of Dollar strength and we could see more of the same in the next couple of days. ( More about this later ). We had unemployment data from the UK yesterday but this produced a mixed picture. The number of people claiming unemployment benefit has risen to the fastest pace in almost two years but a broader meas¬ure of unemployment has fallen sharply. The two measures have been diverging for several months and so it is difficult to determine the underlying strength of the labour market. Going into the weekend the problems in Europe look likely to dominate the markets and we could well see further gains for Sterling against the Euro but at the same time cable could continue its move South.
DATA: 9.30: Retail sales m/m             

Euro: Sorry to have to go over old ground again but at the moment there is no getting away from the fact that Greece and all its problems look likely to dominate the markets for at least the next week or so. In a sign of increasing desperation among Euro zone finance ministers at the need to forge a solution to the Greek debt crisis another emergency meeting has been called for this Sunday in the hope of agreeing a second bailout package. Whilst the ministers are agreed on the need for extra cash to help prop up the Greek government they are still divided as to how to sell the idea to taxpayers. As we saw yesterday all this uncertainty is not going down well with the Greek population and they took to the streets in numbers yesterday to protest about additional wage cuts and tax increases. The longer this pantomime is acted out it will only hurt the Euro and we could well see  continued weakness over the next few days. No Major Data.     

Dollar: Well what a difference a few days can make. After starting the week with a pullback the dollar was everybody's favourite friend yesterday as it made significant gains across the board. Poor data from the UK, coupled with the riots in Greece and greater than-expected inflationary pressures in the U.S. in May boasted demand for the Greenback. The figures from yesterdays trading made impressive reading for the dollar. It enjoyed its strongest run versus the euro in over a month and against Sterling in over 6 months.  The U.S. Dollar should continue to drive higher in the current market environment and we could well see setbacks for all major currencies over the next few days. Batten the hatches down-it could be fun!!!! Data 13.30  Building Permits and Unemployment Claims           
Along with the Swiss franc the NZD is the most overbought currency amongst the major’s but the swell in risk aversion and pressure from the government to keep rates low will cut into further kiwi strength.     


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GBP/USD                        1.6165

GBP/EUR                        1.1435

EUR/USD                        1.4130

GBP/JPY                         130.10

GBP/AUD                        1.5335

GBP/NZD                         2.0135

GBP/ZAR                         11.0750

GBP/CHF                         1.3765

GBP/CAD                        1.5865

GBP/SGD                        2.0045

GBP/THB                         49.42

GBP/HKD                        12.5875

red-down; blue-up (snap shot)

These rates are for indication purposes only.


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John Paul Georgiou

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