US Dollar:
The dollar fell against both the pound and euro yesterday after the Federal Reserve downgraded its outlook for the US economy. The rate-setting Federal Open Market Committee downgraded its outlook indicating that short term interest rates could remain at a record low until next year to support growth. The Fed’s policymaking com¬mittee left its target for short term interest rates between zero and 0.25%, where it has been since December 2008. This saw the greenback give up nearly two cents against a rallying pound as GBP/USD closed in on the $1.50 level, although some help for sterling did come on the back of credit rating agencies giving support to the pound. Even the euro made gains on the dollar with a cent going in the single currencies favour to test the $1.23 level. Disappointing US home sales are still prompting concern about the economic backdrop amid wor¬ries about bank balance sheets in Europe, knocking the dollars value further.
Data 13.30: Core Durable Goods m/m expected 1.1% from –1.1% & Unemployment Claims expected 461k from 472k.
Pound:
Sterling puffed its chest out yesterday and roared ahead against a basket of currencies as its seemed to celebrate England making the final 16 of the World Cup. The pound had been on a upward tear against its rivals since the UK released a belt tightening budget, which two credit ratings agencies said could help secure the UK’s coveted AAA credit rating. Rating agency Moody’s said the budget was supportive of the governments AAA rating, joining rival Fitch in giving a vote of confidence. All sounds nice and rosy on the back of the footie score. Analysts see an immediate UK rate increase as unlikely, but just the mention of monetary policy tighten¬ing has sparked investor enthusiasm for the pound. Against the single currency we saw the pound try to test the 1.22 mark, just falling short and dropping down slightly to 1.2150 this morning. GBP/EUR was helped by continuing concerns about the state of the eurozone economy which looks set to continue. Cable also posted gains as the dollar fell back after the Fed meeting yesterday. The pound put two cents passed the dollar as ca¬ble roared to test the $1.50 level, but has fallen back slightly this morning.
No financial data. Football: Bring on the Germans.
No financial data. Football: Bring on the Germans.
Euro:
The euro fell again yesterday as concerns about the strength of the economic recovery in the eurozone were revived when a key survey pointed to a slowing of activity in June for the second successive month. The euro-zone composite purchasing managers index, measuring activity in both the services sector and manufacturing, dropped to a three month low of 56.0 in June. With anything over 50 indicating expansion and anything below contraction, the figure pointed to expansion but nonetheless was down on the May figure of 56.4. This saw the euro fall against sterling as EUR/GBP homed in on the 0.82 level. A resurgent pound was helped by credit rat¬ing agency comments which saw the single currency give up over one and a half percent against its UK rival. There was a small glamour of hope for the euro when matched up against the dollar, as the greenback gave up ground on the back of the Feds comments on US growth. This saw the euro gain over a cent on the dollar to push EUR/USD over the $1.23 level.
Data 10.00: Industrial New Orders m/m expected 1.6% from 5.7%.
General:
• Oil prices continued to fall in Asian trade as worries persisted over demand in the US, the worlds biggest energy-consumer. Oil fell to $76.16 per barrel.
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| GBP/USD | 1.4960 |
| GBP/EUR | 1.2172 |
| EUR/USD | 1.2295 |
| GBP/JPY | 134.09 |
| GBP/AUD | 1.7191 |
| GBP/NZD | 2.1195 |
| GBP/ZAR | 11.3189 |
| GBP/CHF | 1.6536 |
| GBP/CAD | 1.5540 |
| GBP/SGD | 2.0811 |
| GBP/THB | 48.44 |
| GBP/HKD | 11.6347 red-down; blue-up (snap shot) |
These rates are for indication purposes
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker