Daily Foreign Exchange Market Update

Last week in the foreign exchange market we saw the Pound lose strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.2305 and lost ground across the first half of the week, hitting a weekly low of 1.2273 on Wednesday morning. It then gain strength over the latter half of the week, hitting a weekly high of 1.2429 on Friday morning before closing the week out at 1.2386. The GBPUSD rate opened the week at 1.6037 and peaked on Tuesday afternoon to a weekly high of 1.6131 before it dropped off and hit a weekly low of 1.6002 on Friday afternoon, closing the week out at 1.6030. The main news from the UK last week was that of the Bank of England’s MPC deciding to keep the base interest rate at 0.5% and the asset purchase programme at £375B. This week there will not be much data coming from the UK with the most significant being that of the jobless claims change, showing the amount of new people who are claiming unemployment benefits but still actively seeking work. The figure is set to fall from 10.1K to 5K, some good news for the UK labour market.

The Euro gained strength against the Pound but weakened against the US Dollar during last weeks market session. The EURUSD rate opened at 1.3032 and moved to a weekly high of 1.3126 Wednesday afternoon before it slipped to a weekly low of 1.2877 Friday afternoon, closing the week out at 1.2941. We saw Euro-zone retail sales come out much lower than expected, at -3.6% compared to the predicted figure of -0.8%, showing a lower amount of confidence from consumers in the economy. Euro-zone third quarter GDP came out in line with predictions at -0.1% and on Thursday the ECB decided to keep their base interest rate at 0.75%. This week we are set to see the German CPI (inflation) be released which is predicted to remain at 1.9% and later this week the Euro-zone CPI figure will also be released and set to stay at 1.5%. On Thursday the ECB will release their monthly report discussing various economic topics including information on the latest ECB meeting.

Last week we saw the US Dollar gain ground against both the Pound and the Euro in the foreign exchange market. The latter half of last week saw non-farm payrolls and the unemployment rate released, both showing good news for the labour market in the US. Non-farm payrolls increased by 145K compared to the predicted 85K increase and the unemployment rate fell from 7.9% to 7.7%. This week the Federal Open Market Committee (FOMC) decides on whether or not to keep the base rate at 0.25% with analysts predicting no change. On Friday US CPI (inflation) will be released with the figure set to fall from 2.2% to 1.9%.

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