A Pattern Emerging
12 March, 2013
Yesterday’s markets produced what seems to be becoming the norm, a very subdued Monday. Following last week’s ‘no change’ stance by both the BoE and ECB we saw some volatility with the pound making strong gains against both the euro and dollar before slipping back following hawkish comments by ECB president Draghi and a stronger than expect jobs report from the States.
Today see’s a number of CPI releases from Europe (some of which has already come out this morning) along with some manufacturing data from the UK. It seems at the moment that the 3 major currencies (GBP,EUR and USD) are stuck in a game of cat and mouse with no single currency wanting to take the bull by the horns and really go on a rally. Having said that we have already seen the pound lose over 7% in 2013 so perhaps that decline has bottomed out. With still much political uncertainty in Europe coupled with the chance of a rate cut we could well see the pound recover soon but things are certainly far from rosy on this side of the channel either. Last month we saw the loss of our AAA credit rating and a much closer vote for the extension of QE at the February MPC meeting.
It is likely we will continue to see the ebb and flow we have been seeing recently between the majors and unless there are any major political or economic surprises it’s likely the next big move will be on the back of the BoE minutes that are released next week. Another close vote could well lead to more QE being priced in but does that really have the desired effect?
It’s pretty tough at the moment to second guess the markets and to avoid getting your fingers burnt its best to stay in contact with your account manager here at Currency Index who will be able to keep you informed of all market movements.
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