Sterling mixed— BoE Dale points to lower growth and higher prices in UK

      

US Dollar:

Yesterday saw the dollar strengthen broadly after Bernanke noted an “unusually uncertain” eco-nomic outlook, sending a flood of investors out of riskier assets and into the perceived safety of the greenback. The US Fed chief injected more uncertainty into global markets with a downbeat view of the US economy. Ber¬nanke made no mention of changes to current ultra-accommodative policy in his prepared remarks, but said “We remain prepared to take further policy actions as needed to foster a return to full utilization of our nations productive potential in a context of price stability.” Bernanke’s testimony is more downbeat than the market would have expected and for the Fed Chairman to admit it in such a direct manner didn’t exactly inspire confi¬dence among investors. Data wise we have initial jobless claims and existing home sales due at 13.30 and 15.00 respectively. Data 13.30: Unemployment Claims 449k from 429k. 15.00: Existing Home Sales 5.18m from 5.66m. Speakers 14.30: Bernanke testifies.      
    

 
Pound:
The pound was mixed yesterday as a fall in cable was seen on the back of a rampant move in the dollars favour on the back of Bernanke’s comments, but a gain in sterling was seen over its European counterpart as caution remains in the air ahead of tomorrows European bank stress tests. Sterling remains vulnerable to increased risk aversion and worries about the UK’s fiscal outlook, but should remain steady against the euro and dollar today. Comments by chief economist Spencer Dale highlighted the British economy faces a triple whammy of higher inflation, lower growth and rising unemployment. All in all, pretty downbeat for the UK economy which saw react in a negative way. Following the recent BoE minutes, some economists believe the central bank could restart its quantitative easing measures on growing concerns about the UK economy.  
Data 09.30: Retail Sales 0.5% from 0.6%

 

 

Euro:
The euro slumped across the board yesterday as continuing concerns about tomorrows bank stress tests keep investors away from the single currency. We also saw the euro drop a cent against the dollar after Bernanke noted market concerns about the eurozone sovereign debt crises had eased, but that the Fed would keep an eye on the situation. Growth in the eurozone is expected to slog along at less than a 2% pace through 2012, the International Monetary Fund forecast, as many of the regions counties focus on getting their debt problems un¬der control. The euro posted losses against sterling as 1.2% was given up to push EUR/GBP down to 0.8376, bit has recovered slightly today.
Data 10.00: Industrial New Orders –0.1% from 0.6. 15.00: Consumer Confidence.

 

 

General:
• Japan’s deputy finance minister Motohisa Ikeda said Thursday that the government wants to head off excessive yen strength, a clear signal of discomfort about the possible impact of a rising yen on exports. The yen has gained across the board on the flight to safety as investors  rush to the Japanese currency and come out of the euro.
• Switzerland is fighting a losing battle to stop massive inflows of funds from investors fleeing sovereign risk in the euro area and the rest of the world, raising the risk of a violent spike in Swiss franc if global debt jitters return.

 

 

 

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GBP/USD	1.5218
GBP/EUR	1.1876
EUR/USD	1.2818
GBP/JPY	131.68
GBP/AUD	1.7267
GBP/NZD	2.1244
GBP/ZAR	11.4954
GBP/CHF	1.5878
GBP/CAD	1.5909
GBP/SGD	2.0914
GBP/THB	49.11
GBP/HKD	11.8348 red-down; blue-up (snap shot)

 

 

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