Daily Foreign Exchange Market Update

Yesterday the Pound weakened against the Euro but strengthened against the US Dollar in the foreign exchange market. The GBPEUR rate opened at 1.2509, peaking early morning to a daily high of 1.2546 before slipping across the rest of the day to close out at a daily low of 1.2492 showing overall it was a good day to be buying Euros. The GBPUSD rate opened at a daily high of 1.5873 and also gained strength in the morning to reach a daily high of 1.5916 before closing the day slightly lower at 1.5884. Yesterday UK CPI (inflation) data was released and came out higher then expected, 2.7% compared to the 2.3% predicted. Food prices, especially produce, were one of the main reasons for the increase and they went up due to the record wet weather we had earlier in the year. The Bank of England want to keep inflation low at 2% and the normal way of doing so is by rising interest rates which it will not do during a period of weak economic activity. This month’s results were a lot different to September’s release where CPI was 2.2%, the lowest for nearly three years.

This morning we have already seen UK jobless claims be released, showing the change in the number of people claiming unemployment benefits during the previous month and came out at 10.1K even though there was predicted to be no change from last month where it fell by 4K. Later today the Bank of England will release their inflation report which will show a projection for inflation and growth over the next two years. Mervyn King is also set to hold a conference along with other MPC members to discuss the report’s content.

The Euro gained ground against both the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened at 1.2688 but quickly dropped to a daily low of 1.2660; it then gained strength during lunch and hit a daily high of 1.2728 before closing the day out at 1.2718. Yesterday the German ZEW consumer confidence survey was released showing whether analysts and investors have an optimistic or pessimistic view on the German economy. The Figure came out significantly lower than expected, -11.5 compared to -9.9 showing that even in Germany patience is wearing thin. Today will see French CPI (inflation) be released with the figure not set to move much, from 2.2% to 2.1%.

The US Dollar saw gains against the Pound but losses against the Euro in the foreign exchange market yesterday. No data came out of the US yesterday but today will see a few significant pieces be released, the first being retail sales showing the change in total value of sales at retail level giving us an insight into consumer demand and confidence. Last month retail sales rose by 1.1% but they are set to fall by 0.2% this month showing a decrease in consumer confidence. PPI will also be released later today revealing the change in the prices of finished goods and service sold by producers and is set to rise by 0.2%, lower then the previous result of 1.1%. The Fed will also release the minutes from the October meeting later today.

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