Skip to content

Sterling suffers from weak economic reports as business confidence falls

Pound The pound did manage to recover some losses against the dollar at the end of last week and despite UK markets being closed yesterday and weak economic reports from the UK, has opened only slightly down this morning. After a turbulent week or two in the middle of August, the markets managed to calm down despite witnessing the biggest falls in equity prices since banking crises of 2008. What has hindered the pounds progress was the UK business confidence in the economic outlook plunging this month to its lowest level since the depths of the recession in 2009, Lloyds Bank Corporate markets said. An index of British companies optimism about the economy compared with three months earlier dropped to –3 from 19 in July. Also, in a CBI report, an index of sales volumes at business services companies such as accountants slumped to –22 in the three months through August from 5 in the quarter through May. Pretty gloomy reading, so despite equities lifting, pushing lower yielding currencies down, the pound had little room to maneuver and push higher.
No major data. Speakers: MPC Member Weale.


Euro: Some losses were made back for the euro at the end of last week as a small recovery was seen against both the dollar and sterling. A bounce in global equities saw lower yielding currencies suffer, with the single currency taking full advantage of a gain in risk appetite. This move came on the back of a bounce in US consumer spending and a boost to markets after a Greek bank tie-up. The leap came as Eurobank and Alpha Bank, Greece’s second and third-largest banks, announced a merger backed by Middle eastern finance. The euro gained over two cents versus the dollar as EUR/USD came close to pushing through the $1.4550 level. Against the pound there was less of a gain but a gain still the same from last week’s slip for the euro as EUR/GBP hit 0.8880. The euros biggest move came against the Swiss franc as a gain of 3.5%  was seen in EUR/CHF. The SNB’s continuing actions to weaken the Swiss currency have seen the currency pair rise from 1.14 to over 1.18 in the single currencies favour since last Friday alone.
Data 09.30: Net Lending, Mortgage approvals and M4 Money Supply


Dollar: After the last two weeks gains for the US dollar, a slide down versus its major trading currency partners was seen from Friday as a bounce in the price of global equities saw some risk come back into the market. A combination of better than expected US consumer spending and a tie up between two major Greek banks helped restore some confidence both sides of the Atlantic and US equities closed at their highs with the Dow + 2.26%, Nasdaq + 3.32% and S&P + 2.83%. Encouraging consumer spending figures helped bolster markets, which  have been worrying that growth is stalling. They came in at +0.8%, higher than the expected figure of +0.5% and much improved on last months –0.1. This saw lower yielding currencies sold off as the greenback lost some of its recent gains against the majors.  
Data 14.00: CB Consumer Confidence. 19.00: FOMC Meeting Minutes. Speaker: FOMC’s Kocherlakota.


• A small extract from the Telegraph: A word of caution as summer comes to and end and traders return to their desks, the worst market panics in history have happened in the autumn, including the Wall Street crash of October 1929, Black Monday of October 1987 and the ejection of sterling fro  the ERM in Sep-tember 1992. The sub-prime crises calamity of September 2007 and the collapse of Lehman Bros ex-actly a year later triggered the crises from which the worlds economies are still struggling to recover.


For more information or to request a call back click here


GBP/USD                        1.6385

GBP/EUR                        1.1308

EUR/USD                        1.4486

GBP/JPY                         125.65

GBP/AUD                        1.5383

GBP/NZD                         1.9256

GBP/ZAR                         11.5158

GBP/CHF                         1.3331

GBP/CAD                        1.6041

GBP/SGD                        1.9764

GBP/THB                         49.00

GBP/HKD                        12.7734

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 6917      


For more information