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Fed Chairman may disappoint on QE3 at Jackson Hole which starts today

Sterling sellers could be forgiven yesterday for thinking the end of the week was looking good for the pound, as the UK currency rallied to buy more dollars and euros after better than expected manufacturing data was released. Analysts were expecting a negative figure of –13 but a printed number of +1 was seen. This helped the pounds morning session hit $1.6530 on the dollar and  hold around the 1.1450 on the euro. Then came the scramble for dollars as gold fell and stocks rose. This saw the pound decline in the wake of a return to equities. Sterling did not help itself in the wake of this as data out late last night in the form of Nationwide Consumer Con¬fidence numbers were printed. Even though the number came in slightly better than expected, it still failed to get above the 50 level, printing a disappointing number of 49 (This is a leading financial indicator of consumer spending). Cable gave up a whopping 2 cents as GBP/USD fell from $1.6533 to the $1.6351 handle.  A fall in GBP/EUR was also seen in the wake of this as the pound shed a full cent to push the currency pair to trade at a week low of 1.1332 this morning. No major data. Speakers: MPC Member Weale.


The euro had a similar day to the pound in yesterdays afternoons trading session as it was led by dollar strength which saw EUR/USD lose ground. Today's picture however paints a different story as the euro has taken back most losses versus the buck and printed an impressive rally against sterling. The single currency was helped by weak UK data which saw EUR/GBP rally by over 1% as the currency pair hit a week high of 0.8824. The euro did find itself under some pressure in the early morning trading session as the markets were expecting a bad figure in the form of  German Consumer numbers. They came in at 5.2, a small drop from last months 5.3, so not too bad. This helped the euro fight back versus the dollar gains seen yesterday which has seen EUR/USD push higher to trade back around the $1.4460 level.
Data already out: German Consumer Climate came in at 5.2


Wednesday saw steady gains for the greenback against the pound and euro as risk appetite returned in global equities. Earlier in the week there was speculation that the US may turn to another bout of quantitative easing as early as this weekend, which had undermined the value of the greenback. Federal Reserve Chairman Ben Bernanke will host the Jackson Hole Fed symposium which starts today and goes right through the weekend. Rumours he may disappoint stock investors betting on a commitment to step up stimulus (QE3) have been feeding through the markets. The buck has rallied on this news as another bout of QE would normally see that currency weaken as more dollars flood the market. Against the pound we saw a 2 cent gain in the dollars favour as the greenback hit $1.6351. versus the euro, nearly three quarters of a cent was gained in the bucks favour as EUR/USD hit the $1.44 handle. Data 13.30: Unemployment Claims 403k from 408k.


• Jackson Hole Symposium 3 day meeting starts today.
• Gold’s recent impressive rally came to an abrupt halt yesterday as global equities recovered and the precious yellow stuff fell more than 5%, its steepest decline in nearly three years.
• Global equities rally as Bank of America posts close to 11% gain


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GBP/USD                        1.6383

GBP/EUR                        1.1329

EUR/USD                        1.4457

GBP/JPY                         126.29

GBP/AUD                        1.5649

GBP/NZD                         1.9720

GBP/ZAR                         11.8747

GBP/CHF                         1.2978

GBP/CAD                        1.6160

GBP/SGD                        1.9789

GBP/THB                         49.06

GBP/HKD                        12.7698

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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