Foreign Exchange Daily Market Update 19/07/11

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The Pound ended yesterday lower against both the Euro and the US Dollar in the foreign exchange market. The GBP/EUR rate fell from the morning’s open of 1.1461 down to 1.1408 by the close. The GBP/USD exchange rate also dropped, from 1.6099 down to 1.6024 by the end of the day. There was no economic data released from the UK yesterday to affect movements in the currency market; but the ongoing scandal regarding News Corp and News International does have some political connotations; and with some of the accused parties facing the UK Parliament today the market could well be affected should there be any high-profile political casualties as a result of the House of Commons enquiries.

The Euro ended the day almost unchanged against the US Dollar; the EUR/USD exchange rate opening and closing at levels of 1.4045. There was also no economic data released form Europe yesterday to affect movements in the foreign exchange market.

Today will see the release of German ZEW Economic Sentiment survey results, with the market forecasting a drop in the overall figure, from -9.0 to -12.5; a result that could be detrimental to the Euro, and see the currency weaken against both the Pound and the US Dollar.

The US Dollar did manage to pull back slightly against the Pound yesterday, the GBP/USD rate pulling back to 1.6024 from just below 1.6100. The economic data from the US yesterday wasn’t entirely positive though, with Net long-term TIC flow figures for May showing that less capital moved into the US market for stocks/shares and bonds etc.; the figures showing a level of $23.6billion down from the previous months level of $30.6billion, also well below analysts estimates for an increase in the level to $40.0billion.

The US economic docket for today will focus on the housing market, with building permits figures for June expected to drop slightly, but housing starts are forecast to show a slight increase for the month of June. The housing market in the US, as is in the UK; is still very weak, and any positive data could well be beneficial to the US Dollar in the currency exchange market.

Mike Hood
KBRFX

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