Pound:
Sterling’s finally managed to find some traction yesterday despite the looming release of 3Q GDP due this morning. The only data released yesterday was the BBA’s home loan figures for September. An 18-month low of 31,104 contracts actually beat the consensus; but the overall number isn’t impressive. The BBA would also report that consumer spending was “subdued” while Rightmove reported that those survey respondents that believed housing prices would fall outpaced those that believed it would rise for the first time since 2009. This morning’s GDP 3Q first estimate will set the tone for Sterling traders for the rest of the week. Market consensus is for an increase of 0.4 percent in the third quarter, although GBP is well bid in early trade as certain dealers are calling it at 0.7. Should the figure fall towards the lower end of the range, this may prove to weigh on the British Pound, stoking expectations that the Bank of England will renew quantitative easing (QE) to avoid a back-slide into recession as the government embarks on an ambitious austerity program to trim the hefty UK budget deficit. Stimulus speculation may be added to BOE member Adam Posen – a supporter of QE speaks 16:00
DATA— UK GDP Q3 1 estimate MoM/YoY
Euro:
The euro failure and sudden reversal at 1.41 last week has seen it range trade against the majors. Data out yesterday was very light with Euro-zone industrial new orders topping economists’ expectations as figures rose 5.3 percent in August after falling a revised 1.8 percent the previous month, while the annualized rate soared 24.4 percent. Today’s report marks the largest increase since March of this year, and was one of the main rea¬sons for the euro’s small gain against the U.S. dollar overnight. Coming towards the end of 2010, we feel the single currency will be led by events across the pond but we expect it to come under pressure in the beginning months of 2011 as governments within the bloc implement tough austerity measures in order to battle their high budget debts.
DATA— GER Import prices MoM/YoY (Sept), FRA consumer confidence, (OCT)
General:
Japan – Rates To stay At zero For some time amid tepid inflation with the rise in consumer prices projected to remain below 1% through fiscal 2012, the Bank of Japan will likely keep the policy rate at effectively zero for at least two years.The BOJ believes that the additional monetary easing measures it adopted Oct. 5 will start having an impact on the broader economy over time, helping to minimize consumer price declines.
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| GBP/USD | 1.5770 |
| GBP/EUR | 1.1302 |
| EUR/USD | 1.3954 |
| GBP/JPY | 127.88 |
| GBP/AUD | 10.899 |
| GBP/NZD | 2.0958 |
| GBP/ZAR | 10.8999 |
| GBP/CHF | 1.5336 |
| GBP/CAD | 1.6081 |
| GBP/SGD | 2.0420 |
| GBP/THB | 46.97 |
| GBP/HKD | 12.4416 red-down; blue-up (snap shot) |
For more information or to get the latest spot rates contact:
John Paul Georgiou
Senior Foreign Exchange Broker