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Gold volatility jumps but dollar rebound keeps metal from advancing

The slew of dismal data coming out of the U.K. certainly weighed on the GBP/USD and the British Pound may continue to retrace the rebound from the May low  of 1.6061 as the new developments dampen the prospects for a Bank of England rate hike. Indeed, the pound-dollar slipped to 1.6394 as manufacturing in the U.K. grew at the slowest pace since November 2009, while the downturn in mortgage approvals suggests that the depressed housing market will continue to weigh on the economic recovery as Britons cope with higher liv¬ing costs. Even as the region skirts a double-dip recession, the ongoing weakness within the real economy cer¬tainly leaves the BoE with little room to address the heightening risk for inflation, and the central bank is widely expected to carry its wait-and-see approach into the second-half of the year as it aims to encourage a sustain¬able recovery. As interest rate expectations falter, the pullback in the GBP/USD is likely to gather pace over the remainder of the week, and the exchange rate may continue to consolidate ahead of the next BoE interest rate decision on June 9 as the central bank softens its hawkish outlook for monetary policy.
DATA : Construction PMI.

Through much of the European session, the euro was pushing forward. The pace of currency’s climb was certainly tame but the bias was nonetheless clear. The prevailing fundamental discussion through this advance was the growing consensus amongst policy officials for Greece to pursue a rollover plan where bond holders of the nation’s expiring debt would willingly buy new issues for similar terms and a further maturity date. This is the legitimate alternative to the ‘restructuring’ or ‘re-profile’ options that have been floated recently. Yet, the confi¬dence that this optimism would instil was broken with the unexpected downgrade of Greece’s sovereign credit rating from B1 to Caa1. For perspective, the rating agency noted that Caa1-rated entities have shown a 50 per¬cent default rate over five years. There isn’t any major European event risk due in the final 48 hours of this week so we will have to watch prevailing risk trends and the discussion surrounding the Greek-situation.
DATA : ECB President Trichet speaks.


We are heading into the gravity of Friday’s nonfarm payrolls report; and the mere presence of this indi¬cator has a history of distorting price action. This countdown requires taking a unique tack on fundamental and technical analysis that can render attractive setups inert and leverage otherwise mundane developments into some of the best trading opportunities. And given the price action we have seen through Wednesday’s close, the potential for volatility and perhaps even the beginning of new trends is dangerously high. Looking at activity levels across the capital and FX markets this past trading session, we had something of a disparate perform¬ance. Risk appetite started to rumble and flag in the London session and really began to topple before the New York session was online. Our favoured benchmark for risk appetite trends – the S&P 500 –accelerated into a tumble that would eventually close its worst single-day decline, 2.3 percent since August 11th.
DATA : Unemployment cliams.

The CBOE’s volatility index for gold futures showed its biggest daily jump in nearly a month through yesterday’s session; but the increased activity level did little to establish a clear trend for the metal. The strength for the dol¬lar provided a bearish pressure for gold that was offset by the anti-currency sentiment that resulted from the Greek downgrade.




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GBP/USD 1.6335
GBP/EUR 1.1359
EUR/USD 1.4377
GBP/JPY 132.26


GBP/NZD 2.0063
GBP/ZAR 11.1600


GBP/CAD 1.5973
GBP/SGD 2.0201






ed-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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