Daily Foreign Exchange Market Update

Yesterday proved a good day for the Pound in the foreign exchange market as it gained strength against the Euro and the US Dollar. The GBP/EUR rate opened the day at a low of 1.1669 and strengthened across the day, hitting a daily high of 1.1757 before closing out at 1.1753. The GBP/USD rate opened the day at 1.5106 but dropped below the 1.51 level just after the open of the markets; it did however strengthen across the morning, hitting a daily high of 1.5144 before closing out at 1.5113. The US Dollar also saw losses against the Euro with the EUR/USD rate opening the day at 1.2945 and closing out at 1.2858.

Yesterday morning we saw UK CPI (inflation) come out at 2.8%, as expected but higher than the 2.0% target level set by the Bank of England. Regarding the current situation in Cyprus the political leaders are meeting for emergency talks after they rejected the international bailout deal put forward by the ECB. The plans to charge a one-off tax on savings failed to attract the necessary support and if a bailout deal is not agreed there are fears banks could remain closed as if they are opened there could be a high risk of a bank run.

The main news for today will be focused around the 2013 Budget which George Osborne will release around midday; before this we will see UK jobless claims change for February and the unemployment rate for the three months leading up to January. The jobless claims are expected to fall by 5K and the unemployment rate is expected to remain at 7.8%.

This afternoon will see the release of the FOMC’s decision on whether or not to keep the base interest rate at the current level of 0.25% and no change is expected.

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

Daily Foreign Exchange Market Update

Last week in the foreign exchange market we saw the Pound finally gain some strength against the Euro and the US Dollar. The GBPEUR rate opened the week at 1.1483 and dropped to a weekly low of 1.1371 mid-week before it strengthened over the back end of the week, hitting 1.1624 before closing out the week at 1.1583. The GBPUSD rate opened the week at 1.4936 and like the previous rate it hit a weekly low of 1.4831 mid-week before closing out the week at 1.5131. It was a quiet week for data release from the UK with the main piece of data being industrial and manufacturing production which both fell by 2.9% and 3.0% respectively.

The US Dollar also weakened against the Euro last week with the EURUSD rate opening at 1.3008 and closing out at 1.3059. The main news from the Eurozone last week was their CPI (inflation) result which increased by 1.8% as expected. US retail sales came out of the US last week better than expected at 1.1%. The US CPI data also was released with the figure coming out slightly higher than expected at 2.0%.

Over the weekend we had some significant news come out of Cyprus where, due to an EU bailout deal, bank customers have to pay a levy of up to 9.9% on their savings. Savers with up to €100K in their bank will be charged a one-off amount of 9.9% of the amount in their account and those with under €100K will see a 6.7% charge implemented; this deal is expected to raise nearly €6Bn for Cyprus.

This week is an important week for the UK as the Chancellor, George Osborne will present the 2013 Budget to Parliament on Wednesday. We will also see UK jobless claims change and the unemployment rate be released with the rate for the 3 months up to January expected to remain at 7.8%.

On Wednesday the FED’s FOMC will also meet and decide whether or not they want to change their base interest rate with no change expected; staying at 0.25%.

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

Daily Foreign Exchange Market Update

Yesterday we saw the Pound gain against the Euro but fall in value against the US Dollar. The GBPEUR rate opened the day at 1.2290 and lost ground across the first half of the day, hitting a daily low of 1.2271 at midday; it then gained strength over the latter part of the day to close out at a daily high of 1.2318. The GBPUSD rate opened the day at a daily high of 1.6312 but then fell throughout the day before it closed out at a daily low of 1.6254. Yesterday Manufacturing PMI was released and came out at 51.4, higher than the predicted figure of 49.1 showing a level of expansion in the manufacturing sector. Today the only piece of information set to be released from the UK is the PMI results for the construction sector which is set to come out at 49.5, slightly lower than the previous figure of 49.3 but still below the 50 level.

Yesterday the Euro lost ground against the Pound and the US Dollar in the foreign exchange market with the EURUSD rate opening at 1.3273, hitting a daily high of 1.3291 just after the open and closing out the day at a daily low of 1.3195. German CPI for December was the only figure to come out of the Eurozone yesterday was the CPI figure which was slightly higher than expected, 2.1%. Today there will be no data from the Eurozone.

The US Dollar gained against both the Pound and the Euro in yesterday’s market session off the back of the news that the Congress agreed a deal to stop the large tax increases and spending cuts that were due to come into effect. Initial jobless claims will be released later today with the figure set to be 356K, higher than last weeks figure of 350K.

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

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.

Daily Foreign Exchange Market Update

The Pound saw itself weaken against the Euro and the US Dollar in the foreign exchange market yesterday. The GBPEUR rate opened at 1.2422, a daily high, and lost strength across the day before closing out at a daily low of 1.2374. The GBPUSD rate opened at 1.5964 and quickly gained strength, hitting a daily high of 1.5979 early morning. Throughout the rest of the day it weakened before closing out at a daily low of 1.5930. There was no data released from the UK yesterday and none will come out today.

The Euro gained strength against both the Euro and the US Dollar during yesterday’s market session. The EURUSD rate opened the day at a daily low of 1.2851 before hitting a daily high of 1.2899 at midday, closing the day out at 1.2874. Yesterday we saw German, French and Euro-zone PMI all come out better than expected, some good news for once. Today German GDP figures have been released with the year-on-year and quarter-on-quarter figures coming out in line with predictions, 0.4% and 0.2% respectively. Today there is also a Euro-zone economic summit where heads of state will meet and discuss future plans for Spain and Greece.

The US Dollar saw some gains against the Pound but weakened against the Euro in the foreign exchange market yesterday. There was no data from the US yesterday as it was Thanksgiving and none will be released today

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

Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound weakened against both the Euro and the US Dollar. The GBPEUR rate opened the day at 1.2507, a daily high before dropping to a daily low of 1.2468 just after lunch; it finally closed out at 1.2483. The GBPUSD rate opened at 1.5897 and hit a daily high of 1.5909 mid-morning, it then weakened throughout the rest of the day to close out at a daily low of 1.5869. There was no data released from the UK yesterday but today will see CPI (inflation) come out showing the change in prices of goods and services purchased by consumers. The previous month’s figure was 2.2% and today the figure is set to come out only slightly higher at 2.3%, further away from the headline inflation figure of 2%, set by the Bank of England.

The Euro gained some ground against the Pound and the US Dollar during yesterday’s market session. The EURUSD rate opened the day at 1.2709, falling quickly to reach a daily low of 1.2703; over the next two hours it gained strength to hit a daily high of 1.2726 before closing out the day slightly lower at 1.2712. Yesterday, Euro-Area ministers met in Brussels to discuss the situation in Greece and decided that they would give Greece two more years to meet its fiscal goals but are not expected to authorise more money. Today, German ZEW economic sentiment will be released showing the level of diffusion in the economy, a leading indicator of economic health. It surveys 275 German institutional investors and analysts and a total result of above 0 shows optimism, below 0 showing a pessimistic view on the economy. The result is expected to be -10.1, slightly better then last month’s result of -11.5 but still showing overall pessimism in the market.

The US Dollar gained against the Pound yesterday but weakened against the Euro in the foreign exchange market. Yesterday was a public holiday in the US so no data was released and today is a very quiet day on that front with no data being set to be released again.

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

Daily Foreign Exchange Market Update

Yesterday in the foreign exchange market the Pound saw some gains against the Euro but a slight loss in strength against the US Dollar. The GBPEUR rate opened at 1.2519 before quickly dropping to a daily low of 1.2508 soon after the opening bell. It then gained some strength across the rest of the day and peaked just after lunch to 1.2561, closing the day out slightly lower at 1.2540. The GBPUSD rate opened the day at 1.5984, dropping mid-morning to a daily low of 1.5929 before gaining strength in the first hour of the afternoon, peaking to a daily high of 1.6005, closing the day out slightly lower at 1.5977. Yesterday the main news was that the Bank of England will keep the base rate at 0.5% and the asset purchase target at £375B, as expected by analysts as last month third quarter GDP came out at 1%. Today will be a quiet day with no data being released from the UK.

The Euro weakened against the US Dollar and the Pound during yesterday’s market session. The EURUSD rate opened at 1.2767, a daily high and lost ground during the first few hours of trading, dropping to 1.2719, closing slightly high at 1.2740. Like the UK the main data from the Euro-zone yesterday was the fact that the ECB decided to keep the main interest rate at 0.75%. Today will see various pieces of information being released, the main being German CPI (inflation) which is expected to remain at 2.0%, in line with previous results showing a steady rate of inflation in Germany.

The US Dollar gained some ground against the Pound and the Euro in the foreign exchange market yesterday. The most significant piece of data from the US yesterday were the unemployment claims which were better than expected, 355K compared to the predicted 367K showing a lower rate of people claiming unemployment insurance. Today will see the University of Michigan release their consumer sentiment results which assesses the confidence of consumers within the economy based on personal finance, business conditions and purchasing power. The figure is calculated by subtracting the percentage of unfavourable replies from the favourable ones and this month it is set to come out at 82.9, slightly higher then last months result of 82.6.

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

Daily Foreign Exchange Market Update

The Pound lost ground against both the Euro and the US Dollar during yesterday’s foreign exchange market session. The GBPEUR rate opened at 1.2519, a daily high, falling for the first few hours before hitting a daily low of 1.2480 an hour before midday, closing the day slightly higher at 1.2489. The GBPUSD rate also opened at a daily high of 1.6013, falling throughout the day to reach a daily low of 1.5957 an hour before the close of trade, closing out the day at 1.5975. Yesterday saw UK Purchasing Manager Index for services be released with the result of 50.6 being slightly lower then the predicted level of 52.0 showing there is a very small expansion within the services sector. Today will see industrial and manufacturing production showing the change in total inflation-adjusted value of output produced by manufacturers. Industrial production came out worse then expected at -2.6% and manufacturing production also came out worse but it was a positive figure of 0.1%.

The Euro gained strength against the Pound but weakened against the US Dollar yesterday with the EURUSD rate opening at 1.2792, peaking early to 1.2807 before dropping to a daily low around lunch time to 1.2767 before closing out the day at 1.2791. Yesterday saw Spanish unemployment change being released with the result being much higher than expected, 128.2K compared to 90.3K, bad news for the labour market in Spain as this is the highest change since February this year. Today will see French, German and Italian PMI be released with the possibility of the Euro strengthening if the results surpass the predicted levels.

Yesterday saw the US Dollar gain against both the Pound and the Euro in the foreign exchange market. The only piece of significant data coming out of the US yesterday was the ISM non-manufacturing PMI which came out slightly lower then expected, 54.2, but still above the 50 level showing an expansion in the sector. Today is a quiet day for economic data release but will see Americans going to the polls to vote on who will be their President for the next four years. The outcome will be very important for the economy as a whole and in the next few days we could see the Dollar swing either way depending on who wins.

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

Daily Foreign Exchange Market Update

Last week in the foreign exchange market the Pound strengthened against the Euro but weakened against the US Dollar. The GBPEUR rate opened at 1.2449, falling during the first half of the week to a weekly low of 1.2382 on Wednesday morning before gaining strength across the latter half, peaking Friday morning to a weekly high of 1.2505, closing out slightly lower at 1.2477. The GBPUSD rate opened up at 1.6066 gaining strength throughout most of the week, peaking on Thursday morning to 1.6175 but then slipping down and closing out at a weekly low of 1.6027 on Friday afternoon. Last week the main piece of economic information released from the UK was PMI for manufacturing which is a gauge of manufacturing activity and future outlook. It was expected to fall slightly to 48.0 but actually came out a little lower than expected at 47.5. This week will see the Bank of England meet and decide on whether to change the asset purchasing programme and base rate or keep it the same at £375B and 0.5% respectively and analysts are expecting both to remain the same.

The Euro lost ground against both the Pound and the US Dollar during last week’s market session with the EURUSD rate opening at 1.2904, peaking Wednesday morning to 1.3021 but then closing out the week at a weekly low of 1.2845. Last week there were several pieces of significant data coming out of the Euro-zone including German CPI (inflation) which was higher than expected but the same as last month, 2.0%. German unemployment was also released and came stayed at 6.9%. The Spanish government released their budget last week which saw some improvement on the previous result but still a large deficit of -€46.11. This week will see the ECB meet and discuss the base rate decision which analysts predict to remain at 0.5%. Euro-zone PPI for September will be released early this week with the data set to come out slightly lower at 2.6% compared to the previous result of 2.7% showing a decreasing rate in the change in selling prices of goods.

The US Dollar gained strength against the Pound and the Euro last week in the foreign exchange market. The main data coming out was the unemployment rate which increased slightly from 7.8% to 7.9% and the change in non-farm payrolls which came out better then expected, increasing to 171K from 148K. This week is a very important week in US economics with Tuesday seeing Americans going to the polls to decide on who will be the next US President which will have some affect on the US Dollar.

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

Daily Foreign Exchange Market Update

Last week saw the Pound move significantly against the Euro and the US Dollar in the foreign exchange market due to the release of UK third quarter GDP results. The GBPEUR rate opened at 1.2281 on Monday morning, dropping to a weekly low of 1.2247 on Monday afternoon before gaining strength throughout the rest of the week. When GDP results were released on Thursday the GBPEUR rate spiked above the 1.24 mark. It carried on rising until it peaked to a weekly high of 1.2496 Friday afternoon, closing slightly lower at 1.2442. The GBPUSD rate opened at 1.6036 and fell for throughout the first two days of trading, closing out on Tuesday afternoon at a weekly low of 1.5913. On the release of UK GDP results the GBPUSD rate peaked to a weekly high of 1.6144 on Thursday afternoon, closing the week slightly lower at 1.6091. The main data from the UK last week was the third quarter GDP results which were better then expected, coming out at 1% compared to the predicted 0.6% the catalyst for the strength in the Pound. This week will be a quiet week for UK data release with mortgage approvals being the most significant piece being released, a figure that shows the amount of mortgages approved in September, with the figure set to be 48.7K, up from the previous months result of 47.7K, showing a greater deal of confidence from lenders.

The Euro lost strength against the Pound and the US Dollar during last week’s market session; the EURUSD rate opened at 1.3057 and peaked to a week high of 1.3083 at the close of trade on Monday. It lost strength throughout the rest of the week, reaching a weekly low of 1.2882 on Friday morning before closing the week out slightly higher at 1.2935. There was not that much data released from the Euro-zone last week, the major piece being Euro-zone PMI which came out below the 50 mark at 45.3 showing an expected decrease in business conditions. This week will see more significant data being released with the first piece being German CPI (inflation) year on year for October which is expected to be 2%, slightly lower then the previous inflation figure of 2.1%. German unemployment rate is also set to be released with the figure expected to come out slightly higher at 6.9%, from 6.8% last month.

The US Dollar lost ground against the Pound but gained against the Euro in the foreign exchange market last week. The major data release was the GDP figure that was higher then expected, 2% compared to 1.8% showing a heightened level of growth in the US economy. This week will be a fairly busy week for data release with personal consumption expenditure and consumer confidence both coming out later this week. Personal consumption expenditure is predicted to rise from 1.6% to 1.7% showing consumers are buying more goods, therefore have a greater level of confidence. Consumer confidence, which assesses consumer sentiment regarding business conditions, unemployment and personal income and is also set to increase from 70.30 to 73.0.

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

Daily Foreign Exchange Market Update

Last week saw the Pound weaken against the Euro in the foreign exchange market. The GBPEUR opened at 1.2406 quickly rising to a weekly high at the end of trade on Monday, to 1.2409. Throughout the rest of the week the Pound depreciated against it's Euro counterpart, hitting a weekly low on Friday morning at 1.2278, before closing the week slightly higher at 1.2409. The Pound also lost strength against the US Dollar last week with the GBPUSD opening the week at 1.6030, gaining strength over the first half of the week, peaking on Wednesday lunch time at 1.6178 before slipping lower over the remaining part of the week to close at a weekly low of 1.6003 Friday afternoon. There were a range of different results coming out of the UK last week; firstly CPI (inflation) for September was released and came out at 2.2% compared to 2.5% last September, showing the lowest rate of inflation for two years. Jobless claims and unemployment rates were released with a positive result for both. Jobless claims fell by 4K and unemployment rate fell from 8.1% to 7.9%, the lowest it has been for over a year. Growth in the economy is boosted by consumer confidence and retail sales saw a healthy increase for September compared to August, the month on month figure grew by 0.6% compared to -0.2% for August. The majority of data coming out of the UK in the last few weeks has been positive and now economists are expecting third quarter GDP data to show growth, in turn ending the UK’s nine month long recession. Some economists also believe that as inflation is close to the target rate of 2% and most data has been positive showing the UK economy may be fairing better than expected, the Bank of England may increase the amount in their Asset Purchase Program in November. From last months minutes we gleaned that policymakers were split on whether there was any need for additional QE in the future as the bank has already exhausted the allotment for this month.

The Euro strengthened against the Pound but strengthened against the US Dollar during last week’s market session. The EURUSD opened at a weekly low of 1.2920, gaining strength over the first half of the week to peak on Wednesday at 1.3137; it then closed lower on Friday at 1.3022. Last week the main data from the eurozone was the EU Summit where leaders decided to set up a single eurozone banking supervision meaning they are getting closer to a banking union which allows the central bank to intervene, if necessary, on any of the 6,000 banks in the eurozone. On Thursday Italy’s third largest lender Monte Paschi had its credit rating cut to junk by Moody’s and said it may need more state aid as it was the only Italian lender to fail the European Banking Authority’s stress test. Thursday also saw Spain sell off 3/4/10 year bonds with all the yields improving, falling a little across the day. It was also announced last week that there may be a general strike across the entire Iberian Peninsula, the first time ever, on November 14. Portugal has already called a general strike and Spain may decide to join them, with protests being held over austerity measures. This week will be very quiet for data release with the only significant piece being eurozone government debt/GDP ration which was previously 87.2%.

The US Dollar gained strength against the Pound but lost ground against the Euro during last week’s foreign exchange market session. The main data last week was CPI (inflation) which was slightly higher than expected, 2.0% compared to the prediction of 1.9%. This inflation figure shows stable growth in the US economy, add this to the retail sales figure which came out at 1.1% up from 0.8%, shows an improvement in the US. This week will see the FOMC rate decision which is expected to be kept at 0.25%. As well as this durable goods orders will be released, expected to be up by 6.8% compared to -13.2% last month. Durable goods are meant to last more than three years so they require large investments and usually reflect optimism as the expenditure must be worth while. Finally, more good news for the US economy as Friday will see third quarter GDP be released, it is also set to increase by 1.8% compared to 1.3% last quarter.

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

Daily Foreign Exchange Market Update

Thursday saw the Pound stay unchanged against the Euro, opening and closing at 1.2315, peaking early morning to 1.2330 and dipping to a day low of 1.2304 around noon. The Pound however lost strength against the US Dollar yesterday with the GBPEUR rate opening at 1.6142, falling to a day low early morning to 1.6116. It peaked at midday to 1.6171 and fell throughout the rest of the day to close out at 1.6138. Yesterday saw retail sales being released from the UK with positive results coming out. In September sales in creased by 0.6%, much better then August results which fell by 0.1%. Clothing and footwear sales were up by 2%, showing solid growth from the UK in Q3.

Today will see UK Public Finances, the amount of money financed to the government, being released. The previous figure was a deficit, –9.6B, which is unfavourable and can be bearish for the Pound. The figure for September is set to come out at 4.7B, a more positive result.

The Euro was unchanged against the Pound and lost ground against the US Dollar in the foreign exchange market yesterday. The EURUSD opened at 1.3107, climbing mid-morning to 1.3129 before falling for the rest of the day – reaching a day low of 1.3078, closing slightly higher at 1.3098. Yesterday the main news was from the EU Summit where the leaders have agreed to set up a single eurozone banking supervision, meaning they are getting closer to a banking union which allows the central bank to intervene, if necessary, on any of the 6,000 banks in the eurozone. There was some news out of Italy with its third largest lender having its credit rating cut to junk (Baa3 to Baa2) by Moody’s. Today will see German Producer Prices being released which are set to rise by 1.6%, same as last years result, showing an increase in the prices paid by domestic producers for goods.

The US Dollar gained strength against both the Pound and the Euro during yesterday’s market session even though US initial jobless claims came out a lot higher then expected, 388K compared to 365K. Today there will be no data coming out of the US.

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

Foreign Exchange Daily Market Update 13/06/11

The British Pound had a tough time against the US Dollar over the course of last week. The currency slipped against the Dollar early in the week when the International Monetary Fund (IMF) lowered its growth forecasts growth forecasts for the UK in 2011 from 1.7% to 1.5%. However, the Fund did support the UK government's austerity measures; saying that it remains ‘’appropriate’’ for the Bank of England (BoE) to uphold the "current scale of monetary stimulus". The comment lowered rate hike expectations amongst foreign exchange traders, with the drop in expectation reinforced on Thursday when the BoE held the benchmark interest rate at the historic low of 0.50% and asset purchases at £200 billion. A negative outlook was reiterated for the Pound on Friday, when it was reported that both industrial and manufacturing production was down in April. Industrial production contracted by 1.7%, despite calls for output to remain flat, while manufacturing, which was expected to see a mere 0.1% decline fell by a staggering 1.5%. The data echoes the weaker Purchasing Manager's Index (PMI) readings seen earlier this month and paints a poor outlook for the UK economy. This left the GBP/USD exchange rate to close the week at a low of 1.6220.

This week; Consumer Price Index (CPI) figures for May are due for release on Tuesday, but with the BoE expected to maintain its current monetary policy for most of the year, a better than expected reading of 4.5% may not stoke an appreciation in the Pound. However there may be some optimists in the currency exchange market who may feel differently, so a move to the upside is still possible. Employment figures follow on Wednesday with the number of people seeking jobless benefits claims expected to rise by 6,500 in May, with the claimant count rate expected to hold at 4.60%. The ILO unemployment rate is expected to hold at 7.7%. Should the figures come in as expected, it doesn’t present a hugely encouraging result, but any surprises could spark a movement in the Pound. A slowdown in retail sales from April to May could see the Pound trading lower on Thursday, where it may remain lower against the other majors, as Friday's docket remains bare and therefore unlikely to support the Pound.

A mix of sovereign debt fears and poor economic data hurt the Euro's standing against the other major currencies last week. The Euro had started well with rate hike expectations rising on Monday morning when April's Producer Price Index (PPI) grew by 0.9% month-on-month ahead of a 0.8% forecast. The rally was quickly reversed though when German Finance Minister Wolfgang Schäuble expressed that it was not absolutely certain that Greece would receive further bailout funding. Tuesday's Euro-zone retail sales figures and Germany's factory orders both came in above the consensus reading for April, supporting the single currency until Wednesday; which proved a dire day in terms of sentiment for the Euro-zone. A contraction in Germany's exports for April, coupled with weaker industrial production weighed on the Euro, with further negative sentiment coming in the form of a Reuters article saying that the EU, IMF and ECB would not provide further aid unless Greece could resolve under-financing in its adjustment programme.

The Euro continued to slide despite ECB President Jean-Claude Trichet using the key phrase "strong vigilance", in his post rate decision conference on Thursday, to signal a strong likelihood that rates would rise in July. The phrase was used by the central bank's head following the ECB's decision to hold rates at 1.25%, in line with expectations. This would typically lift the Euro against the other currencies, however Trichet went on to say that further tightening measures would follow a rate hike in July and that the central bank has lowered its growth forecasts for 2012. The news kept the Euro under pressure so that by Friday the GBP/EUR exchange rate breached the 1.13 barrier, making conditions better for buying Euros.

European data will be on the thin side this week, with the first item of note being Wednesday’s release of industrial production for the Euro-zone. The data may push the exchange rate lower as forecasts call for production to contract by 0.2% in April. Thursday's Euro-zone CPI readings could allow the Euro to regain any potential losses if inflation comes in above the forecast 2.7% annual growth rate, while an improvement in the accompanying employment rate could see further gains. However the Euro looks set to end the week on a bad note as April's Euro-zone trade balance is expected to see a trade deficit of 1.9 billion Euros.

In what was an extremely quiet week for the US in terms of economic data, the US Dollar performed well. The Greenback benefited from a drop in rate hike expectations for both the UK and the Euro-zone, while Europe was further hampered by trying to resolve Greece's debt issues. A speech in Atlanta by Fed Chairman Ben Bernanke and Wednesday's Fed Beige Book report were the most significant events to take place on the US calendar. On Tuesday the Fed Chairman put fears over another round of quantitative easing to rest when he said he would maintain the current level of monetary stimulus until labour market conditions boost economic activity, but did see the need to expand the current stimulus package. Bernanke went onto say that the US economy was still growing, albeit at a slightly slower pace than previously, and his comments were backed up by the Fed's Beige Book stating that economic conditions "warrant exceptionally low levels for the federal funds rate for an extended period." Finally, on Friday, the Dollar ended the week on a high note when May's monthly budget statement reported a smaller than expected budget deficit, allowing the EUR/USD exchange rate to fall below 1.6350 as the Dollar rallied against the other majors.

This week’s US docket will start with Tuesday's PPI figures for May. Forecasts call for factory gate inflation to fall slightly from 2.8% to 2.6%, while the core index (without food and energy prices) is expected to remain at 2.1%; indicating that food and energy prices may be on the way down after being elevated for so long. Advance retail sales figures will accompany the PPI, but could push the Dollar lower as sales are set to contract in May.

Wednesday's CPI readings seem set to contradict the earlier PPI figure, as consumer inflation is set to rise from 3.2% to 3.4%, potentially bolstering the Dollar through rate hike expectations. Further to this June's Empire Manufacturing index and May's Industrial Production figure are expected to improve. Falling jobless claims and a rise in Housing starts could see the Dollar strengthen on Thursday, although the expected decline in Building Permits may cloud the picture. Lastly, Friday's University of Michigan confidence index could weaken the Dollar, as consumer sentiment is expected to fall in June, while May's Leading Indicators composite index is expected to improve by 0.3% and could potentially soften the Dollar's decline.

Foreign Exchange Daily Market Update 10/06/11

Yesterday the Bank of England announced their decision to hold interest rates at the historic low of 0.50%, and maintain the stock of asset purchases at £200 billion. Initially the rate decision had little effect on the currency, but as the market digested the increasingly unlikely prospect of an imminent rate hike, the Pound gave way and traded lower, with the GBP/USD exchange rate slipping to 1.6399. Market participants will have to wait until the 22nd June for the release of the meeting's minutes, which will also show the voting results, as once again the central bank refrained from releasing a policy statement. The Pound had seen gains earlier in the day with April’s visible trade balance reporting a better than expected reduction in the trade deficit, which shrunk from £7.708 billion to £7.389.


This morning’s industrial and manufacturing figures for April weakened the Pound’s standing against the other majors with the currency falling to 1.6265 against the Dollar and 1.1241against the Euro. Industrial production contracted by 1.7%, despite calls for output to remain flat, while manufacturing, which was expected to see a mere 0.1% decline fell by a staggering 1.5%. The data echoes the weaker Purchasing Manager’s Index readings seen earlier this month and paints a poor outlook for the UK economy. Also on the docket, Output Producer Prices came in as expected, with core inflation growing at 0.2% in May, down from 0.8% in the previous month. The slow down in price growth means that the Bank of England may retain their stance on monetary policy as the data supports their view that the current level of inflation is still a temporary factor that will die down eventually.

The Euro was down versus the US Dollar this Thursday despite the currency exchange market being given a signal by Jean-Claude Trichet that interest rates would increase in July. Following yesterday’s decision by the ECB to hold interest rates at 1.25%, ECB President Trichet used the term “strong vigilance” when referring to consumer prices, a key phrase that is usually followed by a rate hike at the next policy meeting. This would typically lift the Euro against the other currencies. However, Trichet went on to say that further tightening measures would follow a rate hike in July and that the central bank has lowered its growth forecasts for 2012. Trichet's comments sent the GBP/EUR exchange rate through the roof to peak at 1.1301 before falling back and holding near 1.1280 and maintaining a suitable environment to buy Euros.

With the ECB's head having signalled that a rate hike is on the cards for July, market trader's will be watchful for any economic indicators to support this move by the central bank and today's docket provides one such indicator: Germany's Consumer Price Index (CPI). CPI figures do have the potential to push up rate hike expectations, but unfortunately for the Euro, Germany’s CPI remained unchanged. Elsewhere on the docket, French industrial and manufacturing production for April came in weaker than expected. Industrial production actually contracted by 0.3% (although this is an improvement on March’s 1.1% contraction) and manufacturing increased by 0.2% missing estimates for 0.3% rise.

Thursday was a mixed bag for the US Dollar. Just before the open of the North American session the Dollar rallied following a greater than expected contraction in April's trade balance deficit which fell from a downwardly revised $46.8 billion to $43.7 billion, when forecasts had called for the deficit to widen to $48.8 Billion. This saw the Dollar rally and pushed the EUR/USD exchange rate to a low of 1.4478 and GBP/USD to 1.6358. The Dollar's rally was however restricted as initial jobless claims unexpectedly rose to 427,000 from 426,000. While it is only a small increase, it does however echo the rather poor employment figures that were released last week.

The big figure out this afternoon from the US will be May’s monthly budget statement which is expected to show that the budget deficit narrowed from April’s figure of $135.9 billion to $131.0 billion. The forecast outcome has the potential to push the Dollar higher as the data suggest that the US government is a step closer to balancing its spending against its income. However a higher than expected budget deficit would set the Dollar back.