The main news yesterday was that of the Pound falling to a 4 month low against the Euro in the foreign exchange market showing it is not a good time to be buying Euros. The GBPEUR rate opened at 1.2281, gaining strength during the first half of the day to reach a daily high of 1.2310. It then fell throughout the rest of the day, reaching a daily low of 1.2247 an hour before the close of trade, closing slightly higher at 1.2269. The Pound also lost ground against the US Dollar during yesterday’s market session. The GBPUSD rate opened at 1.6036, peaking early, a few hours into trading to reach 1.6053, before falling throughout the rest of the day to close out at a daily low of 1.6026. There was no data released from the UK yesterday and only one piece will be released today. BBA loans for house purchases in September will come out, the number of loans approved for house purchases in the month with the figure set to increase from 30,533 to 30,840, showing an increase in confidence which is healthy for the economy. However, Mervyn King, the Governor of the Bank of England will speak at the Chamber of Commerce today in Cardiff. As Governor of the Bank of England he has more influence over the Sterling than anyone else so analysts will scrutinize the speech to try and predict how the Pound will fare against foreign currencies.
Yesterday saw the Euro gain against the Pound and the US Dollar during the market session with the EURUSD rate opening at 1.3057 and closing at 1.3062. It fluctuated throughout the day, falling early morning to a daily low of 1.3025 but peaking an hour before the close of trade at 1.3083. The only data to be released from the eurozone yesterday was the government debt/GDP ratio for 2011. This ratio shows the amount of debt a eurozone country’s government has compared to the GDP of that country. At the end of 2010 the ratio was 87.2% and at the end of 2011 it increased slightly to 87.3%, not a great deal of difference, still a very high figure.
Today, eurozone consumer confidence will be released, data collected from a range of surveys on various topics including personal finance, the job market and future expectations. The previous figure was -25.9 and today’s figure is set to come out at -25.8, slightly better but still showing a very low level of confidence within the eurozone area.
The US Dollar gained strength against the Pound but weakened against the Euro during yesterday’s foreign exchange market session. This came off the back of no data being released from the US yesterday, the only news being the third and final US presidential debate, the election being dubbed the economic election where the main topic of conversation was foreign policy including defence spending and the trade partnership with China. No data will be released from the US today.
This Daily Market Update is brought to you by The Market Team @ KBRFX – Exchange Rate, Currency Conversion & Foreign Currency Transfer specialists.
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.
