Foreign Exchange Daily Market Update 08/11/11

The Pound finished yesterday slightly lower against the Euro but a touch higher versus the US Dollar in the foreign exchange market. The GBP/EUR exchange rate fell from the morning’s open at 1.1669 to trade at 1.1655 by the close of the UK business day, with the GBP/USD exchange rate opening at 1.6003, and closing at 1.6022 following some choppy trading. There was no economic data of not released form the UK yesterday.

This morning will see the release of September’s industrial and manufacturing production figures, with the market forecast for an annual increase in manufacturing production, but industrial production is forecast to fall both annually and monthly. Later on today will also see the latest NIESR GDP estimate for October cross the wires. Any sharp downward revision could be damaging for the Pound, but considering the Bank of England’s addition of an extra £75billion towards monetary stimulus, the likelihood is for a reading around 0.50%, which should be positive for the market.

The Euro gained a touch against the Pound and the US Dollar yesterday in the currency exchange market, with the EUR/USD exchange rate rising throughout the day, up to 1.3745 at the day’s close, from the morning’s open at 1.3714. Economic data released from the Euro-zone yesterday was largely disappointing though. Euro-zone Sentix investor confidence fell for November, from -18.5 to -21.2, with Euro-zone retail sales also falling; both annually and month-on month, from -0.1% to -1.5% and from 0.1% to -0.7% respectively. German industrial production figures also showed a sharp decline for the month of September, dropping from -0.4% to -2.7% annually.

This morning has already seen some positive data from Europe, with the German trade balance showing an increase in the nations trade surplus from €11.8billion to €17.4billion, which is beneficial for the country, and may be one positive result of a weakening Euro currency, which enables other countries to buy goods from the nation at a cheaper price.

The US Dollar fell against the Euro and the Pound yesterday, losing some of the previous weeks gains based on shifts in risk sentiment. The overall outlook for the US is not great, with the Federal Reserve clearly worried about the possible effect of European default on its own shores. There has been a small improvement in the labour market over the past month, and figures released yesterday showed that consumer credit increased for the month of September, which should see more money flowing through the economy.

There are no significant figures set for release from the US today, so movements will come from shifts in risk sentiment, and possible unfolding of the situation in Europe. There has been talk of an expansion to the EFSF in the coming days, and also there are rumours of Italian PM Silvio Berlusconi stepping down. There is also set to be an announcement made very soon on Greece’s new Prime Minister, and then there will be further discussion to try and resolve the funding situation for the country before it runs out of cash.


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