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Dollar takes double blow from Bernanke and Moody’s

The pound traded near the strongest level in almost a month against the euro after Greece’s credit rating was downgraded, stoking demand for alternatives to the European currency. Sterling also climbed against the dollar for a third day after the U.S. Credit rating was put on review for downgrade. We started yesterday’s UK session at 1.5955 and peaked at 1.6185 before pulling back to current levels of 1.6120. Reports this week showed infla¬tion unexpectedly slowed and retail sales slid in June while jobless claims rose, prompting investors to reduce bets that the Bank of England will increase interest rates from a record low, even as inflation runs at more than twice its 2 percent target.
No major data due today.

Greece’s credit rating was cut three levels to Fitch Ratings’ lowest grade for any country in the world as the company followed rivals and said that default is a ‘real possibility’.
The move from CCC from B+ “reflects the absence of a new, fully funded and credible” program by the Interna¬tional Monetary Fund and the European Union, the ratings company said yesterday.
Fitch is the third ratings company to cut Greece to the bottom tier of its rankings, reflecting concerns that a new aid package being negotiated for the nation will inflict losses on investors. Greece was downgraded to Caa1 by Moody’s Investors Service on June 1 and CCC by Standard and Poor’s on June13.
No major data due today.

Sterling jumped against a weak dollar yesterday after U.S. Federal Reserve chairman Ben Bernanke hinted at the possibility of more monetary easing if the economy weakens and inflation moves lower. Before the winds shifted on Wednesday, the greenback managed a 740 point rally against its benchmark counterpart (the euro).; but this performance was watered down when checked against its other pairings. What was really influential here was the market was already thinking through the negative implications of QE3, so its mention stirred exist¬ing fears. Moody’s Investor Services has put the U.S. Government’s top-notch credit rating on review for a pos¬sible downgrade because of the risk that Washington will not raise the federal debt ceiling in time to avoid a default. Data 13.30: Core Retail Sales; PPI; Retail Sales; Unemployment Claims — 15.00 Fed Chairman Ben Bernanke Testifies.             


• New Zealand Dollar surges on remarkable 1Q growth of 0.8%  against market expectations of 0.3%.


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GBP/USD                        1.6100

GBP/EUR                        1.1340

EUR/USD                        1.4200

GBP/JPY                         127.30

GBP/AUD                        1.4990

GBP/NZD                         1.9065

GBP/ZAR                         11.02

GBP/CHF                         1.3140

GBP/CAD                        1.5445

GBP/SGD                        1.9580

GBP/THB                         48.50

GBP/HKD                        12.54

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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