A Mixed Day For Sterling

The big news was, obviously, the unemployment figures being incredibly positive, with unemployment falling by 51,000 to 2.61 million in the three months to April, the largest quarterly fall in unemployment since August 2010. The news itself was somewhat tainted, however, by the news that despite unemployment falling, the number of people claiming jobseekers allowance had actually increased slightly, to the tune of 8,100 more claimants. Under normal circumstances, such positive data would be incredible news for the sterling rates, especially considering that we’re technically in recession.

However, any major gains were offset by the minutes to the BoE’s June meeting showing far stronger support for more quantitative easing than many analysts had expected. Any major disruptions were only halted by the positive jobs data, and the markets being already primed for such a scenario after a speech by governor Mervyn King last week.

The slight gains made by sterling on Wednesday did, however, allow the UK currency to gain ground against the US dollar, giving us the best rates for transferring sterling to dollars in over a month. This was due to the US Federal Reserve deciding to cut its forecast for economic growth in 2012 from 2.9% to 2.4%, likely off the back of the rise in US unemployment in April by 0.1%.

The Eurozone’s eye is still focused entirely on Greece, where the beleaguered nation finally swore in a new government yesterday. By extension, analysts have their eyes turned towards Mexico for the G20 summit, where the discussion of the Greek problem is due to be a major issue. Analysts are holding their breath in anticipation for results of the summit, preventing the Euro from making any major swings either way. Elements in the level of confidence behind the G20 summit can be seen by the fall in Spanish and Italian bond yields. While we aren’t seeing the 31/2 year high rates for transferring sterling to euros that we saw last month, anyone looking to make transfers into Euros should be aware that the results of the G20 will likely provide the struggling European currency with a slight, possibly temporary, increase in strength.

Some of you may have noticed that we’ve been including football as well as currency news in these reports. Sadly, I know little to nothing about football, to the extent that I can’t even explain the offside rule. However, the senior brokers here at Currency Index know almost as much about football as they do about getting the best rates for currency transfers, so I’d encourage you to give your broker a call if you require any currency requirements, or football chit-chat.