Pound
Sterling managed to hold onto levels against the euro and dollar seen yesterday despite a scathing report by the OECD on the UK economy. Britain has underperformed all the worlds leading economies over the past year except Japan. The revelation from the international think-tank will pose fresh questions for Chancellor George Osborne, who is already under pressure to bolster his economic strategy in the face of flagging growth. The pound held ground versus the US currency and was helped after the dollar dipped in the wake of Chinas manu¬facturing numbers. This saw cable gain around half a cent to push GBP/USD over the $1.65 handle. Yesterday saw a slight drop against the euro but a small pullback for the pound has been seen in the early morning UK trading session.
Data 09.30: BBA Mortgage Approvals 32.3k from 31.7k. 11.00: CBI Industrial Order Expectations –13 from –10.
Euro:
The euro made gains against the dollar this morning after a sell off for lower yielding currencies gave the single currency a leg up over its higher yielding counterparts. Half a cent was seen in EUR/USD after economic data from China was released to push the currency pair up to the $1.4440 level. A small move in the euros favour versus the pound was also seen as sterling saw some weakness after an OECD report on the weakness in the UK economy. Data already out this morning showed Germany’s PMI Services fell to 54.4 in Aug from 52.9.
Data 10.00: German ZEW Economic Statement –24.8 from –15.1.
Dollar:
The dollar fell against most of its peers after a private report signalled China’s manufacturing shrank at a lower pace this month than in July, supporting demand for higher yielding assets. The China figure came in at 49.3, below the 50 number, indicating contraction. Last week, Morgan Stanley claimed Britain was one of the few countries not on the brink of recession, warning that the US and Europe were on the point of a double dip reces¬sion, two years after the end of the last one. Chief economists at both JP Morgan and BoA have both estimated the probability of a US double dip at 40%. Their concerns were lent weight by a surge in problem mortgages in the US. Markets are now waiting in hope for Ben Bernanke, chairman of the Federal reserve, to signal the US will start a third round of quantitative easing (QE) when he speaks at Jackson Hole this Friday. If we see an¬other round of QE, the dollar may see some weakness as a flood of dollars into the market would water down what's already in the system.
Data 15.00: New Home Sales 313k from 312k.
General:
• Gold prints another record high as the precious metal goes through the $1,900.00 level.
• Rumours of intervention by the Bank of Japan to stop the continuing rise in strength of the Japanese Yen are spreading through currency markets.
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GBP/USD 1.6520
GBP/EUR 1.1435
EUR/USD 1.4445
GBP/JPY 126.69
GBP/AUD 1.5730
GBP/NZD 1.9818
GBP/ZAR 11.8344
GBP/CHF 1.3022
GBP/CAD 1.6277
GBP/SGD 1.9884
GBP/THB 49.08
GBP/HKD 12.8872
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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