US Dollar:
USD seems to be in tight ranges and with little to no data due out today it could be a case of drifting slightly to-day until picking up a direction tomorrow. The pressure that has been mounting on USD has been due to
“concerns that the economic recovery could be happening more slowly than originally anticipated” said Mathew Straus at RBS Capital Markets. He is being kind!! The concern currently is that the whole global recovery has come off its tracks knocked by Sovereign debt concerns and due to these fiscal tightening so severe the global GDP will fall into double-dip territory. No data
Pound:
Sterling weakened yesterday against the majors with EUR being the main benefactor. Opening this morning testing the 1.20 level for resistance and if broken, low 1.19 would be the next target. This is quite a retracement from the recent 1.2395 high, but is more a sign of a relief rally in EUR rather than a loss of confidence in GBP. UK Shop price inflation fell for second month in a row in June, with declines in food and non-food inflation and deflation in some areas according to the British Retail Consortium. Despite the headline grabbing figures Infla¬tion seems to be under control until the New Year when the VAT increase will place a strain on the figure. Even still this increase then could also be seen as reducing the velocity of growth in the economy and therefore unless it feeds through, should also be put in context. The government and general public will certainly be hop¬ing the MPC view it this way as it seems essential a long period of low base rates persists.
Data: Nothing today…. MPC decision tomorrow, expected unchanged.
Euro:
The EUR correction higher against the majors continues although how much legs this has left would be the question. We are unlikely to find too many answers today, however confidence is key and whether risk aversion kicks back in. Euro bank stress test results could prove pivotal. Trichet tomorrow is expected to steer a steady line and not surprise anyone expect “medium term price stability” to be stated on numerous occasions. To be fair it is his mandate!!
General:
• Standard Chartered has told clients to prepare for a fall in property prices of up to 30% in most large cities in China as the monetary tightening begins to bite. If this hits the banking sector, and it is difficult to see how it can’t, it could lead to severe retrenchments for everyone. China appears to be looking for fresh areas to park their foreign reserves with JGB’s gaining favour away from Eurozone debt.
• Investors are also likely to keep a close eye on the Swiss National Bank after consumer prices in Swit¬zerland turned negative in June, leading BNP Paribas analysts to speculate the SNB could restart inter¬vention in currency markets to temper franc strength and stave off the threat of deflation.
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| GBP/USD | 1.5090 |
| GBP/EUR | 1.2002 |
| EUR/USD | 1.2575 |
| GBP/JPY | 131.52 |
| GBP/AUD | 1.7838 |
| GBP/NZD | 2.1874 |
| GBP/ZAR | 11.5930 |
| GBP/CHF | 1.037 |
| GBP/CAD | 1.5982 |
| GBP/SGD | 2.1005 |
| GBP/THB | 49.00 |
| GBP/HKD | 11.750 red-down; blue-up (snap shot) |
These rates are for indication purposes
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John Paul Georgiou
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| GBP/USD | 1.5091 |
| GBP/EUR | 1.2080 |
| EUR/USD | 1.2595 |
| GBP/JPY | 133.34 |
| GBP/AUD | 1.7902 |
| GBP/NZD | 2.1879 |
| GBP/ZAR | 11.7132 |
| GBP/CHF | 1.6143 |
| GBP/CAD | 1.6115 |
| GBP/SGD | 2.1117 |
| GBP/THB | 49.26 |
| GBP/HKD | 11.8462 red-down; blue-up (snap shot) |