Daily Foreign Exchange Market Update 25/10/11

The Pound closed out the day slightly lower against the Euro, but higher versus the US Dollar in the foreign exchange market yesterday. The GBP/EUR exchange rate fell from the morning’s open at 1.1485 to trade down at 1.1477 by the UK market close. The GBP/USD exchange rate however picked up from 1.5952 to trade up at 1.5983 by the market close, with the rate breaking 1.60 in the early hours of this morning; before pulling back slightly. There were no significant data releases from the UK yesterday, with the currency market responding to shifts in risk sentiment and news from the world’s other major economies.

This morning will see the release of September’s BBA loans for house purchase figures, with the market forecast for there to be an increase in the overall number; from 35,226 in the previous month to around 36,000; which could be positive for the Pound as it would indicate an improvement in a small part of the credit market.

The Euro lost ground against the Pound, put pulled back against the US Dollar yesterday in the currency exchange market. Despite ongoing issues in regards to the regions debt woes, the currency managed to regain nearly half a cent against the Dollar, the EUR/USD exchange rate rising from 1.3889 to trade up at 1.3925 by the market close. The overall view of yesterday’s economic data released from Europe was negative, with Euro-zone PMI manufacturing and services indices both falling in October, as well as German PMI manufacturing falling for the same period. There was a small increase in German PMI services data for October, but it was not enough to change the negative outlook.

This morning has already seen the release of German GfK consumer confidence numbers for November, and there was a surprise pick-up in the overall level, from 5.2 to 5.3 for the month. The news had hardly any effect on the market though, with the Euro still facing the potential of some very choppy movements in the coming days.

The US Dollar weakened against both the Euro and the Pound in yesterday’s trading, and the currency was not helped by negative data released; with the Chicago Fed National Activity Index for September showing a decline from the previous month’s level of 0.59, down to 0.22.

The currency is likely to take direction from today’s key release of consumer confidence numbers for October, with the market forecast for an increase in positivity, which could help the Dollar regain a foothold in the market, following almost a full week of declines against the Pound. Augusts’ house price index figures will also cross the wires; with the expectation to see a decline overall; which while negative is likely to be overshadowed by the consumer confidence figure.

This Daily Market Update is brought to you by The Market Team @ KBRFX – Exchange Rate, Currency Conversion & Foreign Currency Transfer specialists.