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Risk sentiment improves to see dollar give up recent gains on majors


US Dollar:
The dollar had a good rally this week, but we have now seen some of those gains given up as risk re-appears back in the market. The high amount of sovereign debt uncertainty is likely to put a question mark on the sus-tainability of Wednesday’s gains and it will be interesting to see whether investors are willing to take profits early. The dollar has now moved from its 4 year high against the euro of $1.2148 and given up a cent for EUR/ USD to rise close to the $1.23 level. Against the pound there has also been a move against the greenback as a full cent was lost to push cable up to the $1.45 level. We saw better than expected US data on durable goods and new home sales reduce worries over the economic outlook, which in turn gave the riskier trades a boost, in turn seeing a sell-off in the value of the greenback.
Data 13.30: Prelim GDP q/q expected 3.5% from 3.2% + Unemployment Claims expected 450k from 471k.     
Sterling seems to be shaking off recent setbacks, rebounding somewhat against the dollar and yen, with yet more gains posted against the under-fire single currency. Technical's are helping, but traders remain on the outlook for selling opportunities, which could short-circuit the pound and euros recoveries. Cable managed to level off the recent fall against the buck at the start of the week and has now posted a full cent against its US counterpart since yesterday. GBP/USD has blasted through the $1.44 level and broken through the $1.45 mark this morning. Sterling, while higher, still has a weak profile against the dollar as investors remain poised to flee to the safe haven greenback on more bad news. However, the pound looks to gain a bit against the euro over persistent worries over eurozone debt crises. We have now seen the 1.18 mark broken Thursday, but both cur¬rencies remain open to selling pressures should more negative news appear regarding the sovereign debt is¬sues already in play.  
Data 11.00: CBI Realized Sales expected at 13 unchanged.


A game of two halves for the single currency yesterday as we saw the euro make back losses against the dollar, as risk appetite crept back into the markets, but a continued fall against the pound soured the single currency’s recovery. The ECB’s loss of anti-inflationary credibility and the questionable future of the euro has diminished the European common currency’s appeal as a reserve asset and dollar-substitute in the world economic order. An FT report which said without citing sources that China was meeting with foreign bankers to discuss its hold¬ings of eurozone debt might have helped speed up the currency’s end-of-day dip on Wednesday. China proba¬bly has a ton of euro holdings, and must be very concerned about the recent events. Selling the common cur¬rency as any negative headline hits the news. This may be just another excuse to sell the euro.   
No major data. Speaker: Buba President Weber Speaks.

• Oil prices are a shade lower Thursday as caution returned to the markets on persistent concerns over the eurozones finances. N.Y. main contract is now trading at $71.36 a barrel.
• Spot gold was slightly up at $1,211.30 a troy ounce.


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GBP/USD 1.4373
GBP/EUR 1.1584
EUR/USD 1.2411
GBP/JPY 131.27
GBP/AUD 1.7273
GBP/NZD 2.1154
GBP/ZAR 11.2369
GBP/CHF 1.6540
GBP/CAD 1.5116
GBP/SGD 2.0237
GBP/THB 46.49
GBP/HKD 11.2193 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