Skip to content

Pound remains under pressure -Tories & Lib Dems continue to negotiate

 

US Dollar:

Global stock markets are rising on news of a massive European Union package to stabilize the euro and ease debt concern, backed up by potential measures by the European Central Bank and other major coun¬terparts. Yet, a healthy dose of caution remains in the markets. This saw risk appetite creep back into the mar¬kets and the normal dollar sell-off play was seen. The greenback gave up over four cents against  a resurgent single currency after hitting $1.4476 on Friday and we also saw the buck give up over three cents on the pound after hitting a year high of $1.4475. Another volatile week lies ahead amid political concerns that raise questions about the will of EU countries to follow through on a massive rescue package to resolve debt concerns, and also concerns about the outcome of the UK general election.  No major data.    
        
 

Pound:

Last week was rocky enough for the pound and this looks set to carry on as uncertainty remains in which combination of parties will take over and run the country. Friday saw massive swings in the value of ster¬ling as news continued to filter through of a hung parliament, then the possibility of a shared coalition between the Tories and the Lib Dems. This seemed to stem the losses seen in the value of the pound, as it seemed the lesser of two evils compared with a Labour party staying in Government. We saw a bounce up from a year low against the dollar and 1.1356 posted against the euro as the possibility of a Tories/Lib Dem pact filtered through. The return of some risk into global markets also helped the value of cable and we have now seen a bounce of over three cents from Friday lows. Against the euro there has been a lapse back down again as the news of a EU financial package bailout has helped lift the value of the single currency. In the UK, the top politi¬cians from the UK Conservative and Liberal Democratic parties held almost seven hours of talks on Sunday on a possible power-sharing deal but negotiations looks set to stretch on for some time. With a UK political deal unlikely to be sealed imminently, analysts said UK assets (including sterling) could face a bumpy ride. The mar¬kets will also be eyeing a Bank of England Monetary Policy Committee meeting today at which policy makers are expected to leave interest rates on hold at 0.5% for the 14th month running and also must decide whether to extend the £200bn bind-buying program. Data 12.00: BoE Interest Rate Decision expected 0.50% un¬changed, Asset Purchase Facility expected unchanged at £200bn & MPC Rate Statement.
    
 
  
Euro:

The euro is higher against the pound, dollar and yen after news Monday that the ECB is set to intervene in public and private debt markets, which eased some fears that Greek fiscal troubles will spread to other Euro¬pean nations, at least for now. The European Central Bank said it also would reopen liquidity swap with the US federal Reserve, while the French finance minister Christine Lagarde said that the EU, ECB, IMF and G-7 were determined to stabilize the euro. The EU’s monetary affairs commissioner, Olli Rehn, said the agreement “proves that we shall defend the euro whatever it takes”. Shortly after the deal was announced, the euro which last week sank to a 14-month low against the dollar, rose nearly two percent in early trade in Asia. The single currency also took 1.2% off the pound, which itself is also under huge pressure after no clear winner was seen in the UK general election.
Data 09.30: Sentix Investor Confidence expected 1.1 from 2.5. Speakers: ECB President Trichet.
    
 

General:
• The Bank of Japan left interest rates unchanged at 0.1% but joins other central banks in re-opening dol¬lar swap facilities with the Fed.

 

For more information or to request a call back click here

 

GBP/USD 1.4883
GBP/EUR 1.1447
EUR/USD 1.3014
GBP/JPY 139.05
GBP/AUD 1.6620
GBP/NZD 2.0415
GBP/ZAR 11.0995
GBP/CHF 1.6331
GBP/CAD 1.5255
GBP/SGD 2.0525
GBP/THB 48.01
GBP/HKD 11.5893 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 6851

john.georgiou@voltrexfx.com This e-mail address is being protected from spam bots, you need JavaScript enabled to view it  

 

 

Related