Pound:
The British pound has undergone a remarkable fundamental shift this past week yet the market seems to be in a state of denial. With the government’s austere spending cuts and Chancellor Cameron’s suggestion that the Bank of England can fill in the gap for growth, we are presented with a situation whereby the economic recovery is likely to stall and the central bank will have to resort to policy easing. This is essentially the same situation that the US dollar is in and yet, the sterling still maintains a significant premium over its US counterpart. Perhaps next week’s event risk will draw speculative interests to the fundamental light. At the top of a busy docket is the first reading of 3Q GDP. The consensus forecast already calls for a significant moderation from the previous period on a 0.4 percent increase through the period. Growth is already an important reading for the currency but it is especially serious as a benchmark for the impact of fiscal rebalancing.
DATA : No major data to be released today
Euro:
European Central Bank President President Jean-Claude Trichet said on Saturday that new European Union fiscal rules pushed by France and Germany were too weak to safeguard the euro zone. EU finance minis¬ters agreed last week to toughen the bloc's budget rules to prevent future sovereign debt crises after an agree¬ment struck in France between President Nicolas Sarkozy and German Chancellor Angela Merkel, which diluted initial plans. German magazine Spiegel reported that Trichet had warned French and German officials at the meeting of European Council President Herman van Rompuy's taskforce on fiscal reform, that their actions could threaten the coherence of the euro zone. However, Trichet said he had simply stuck to the ECB's position that semi-automatic sanctions were required to ensure the efficacy of any fiscal pact for the 16-nation currency bloc.
DATA : No major data to be released today
General:
A steady approach on monetary policy is generally a common tactic for global central banks nowa-days. However, for the RBNZ, a stay on rates eats into the perceived appeal of a weakened high-yield currency. The policy authority is scheduled to announce its policy decision on Wednesday and the market sees no chance of a change. That said, the one-page report to accompany the decision will be broken down.
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| GBP/USD | 1.5730 |
| GBP/EUR | 1.188 |
| EUR/USD | 1.4056 |
| GBP/JPY | 126.74 |
| GBP/AUD | 1.5788 |
| GBP/NZD | 2.0838 |
| GBP/ZAR | 10.816 |
| GBP/CHF | 1.5221 |
| GBP/CAD | 1.6004 |
| GBP/SGD | 2.0293 |
| GBP/THB | 46.69 |
| 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
