Foreign Exchange Daily Market Update 09/11/11

The Pound finished yesterday a touch lower against the Euro, and marginally higher against the US Dollar in the foreign exchange market. The GBP/EUR exchange rate fell from the mornings open at 1.1663, to trade at 1.1656 by the UK market close. The GBP/USD exchange rate though closed at 1.6077; higher than the open at 1.6062, with the rate also breaking 1.6100 during mid-afternoon. Economic data released from the UK yesterday showed that industrial production rose annually, but fell monthly for September, and manufacturing production showed a positive increase both annually and month-on-month. The latest NIESR GDP estimate for October produced a reading of 0.5%, which was exactly in line with the market forecast, and is exactly the same as the last quarter’s actual reading.

This morning will see the UK’s visible trade balance numbers cross the wires, with the expectation to see a further increase in the UK’s trade deficit, highlighting a lack of export activity despite the fact that the Pound is still quite weak overall.

The Euro closed higher against the Pound and the US Dollar in the currency exchange market yesterday; this was despite the news that Italian Prime Minister Silvio Berlusconi is set to step down after losing a vote of confidence, and that bond yields in Italy are reaching dangerous levels. The EUR/USD exchange rate closed higher on the day, up from the morning’s open at 1.3770, closing at 1.3792. There was some positive news from the Euro-zone; with Germany’s trade balance showing a further increase in the nation’s trade surplus, up from €11.8billion to €17.4billion.

There are no significant data events scheduled for the Euro-zone today; but the market will be watching closely for any comment or developments in regards to Greece and Italy, which could well give the Euro currency some direction.

The US Dollar lost some ground versus the Pound and the Euro yesterday. Despite the increasing turmoil in Europe, the currency has been steadily reversing last week’s gains. There was no significant data released form the US yesterday, with market movements being attributed to shifts in risk sentiment.

Today will see Federal Reserve Chairman Ben Bernanke speak at a Fed conference on small business. The market will watch closely for any indication from the central bank chief in regards to business conditions, and also credit conditions for companies.

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