A strong finish for the GBP
28 February, 2014
As the month comes to a close we look to see if sterling will stay buoyant like in recent days or could we see some profit taking from investors closing positions? Thursday was a mixed bag for the pound as with no data in the UK it was left to data releases elsewhere around the world to direct movement.
The day started with Swiss GDP which came in lower than expected at 1.7% rather than 2%, so from a reading of 2.1% last month, the decrease in growth is happening at a faster pace. With the Swiss seen as a safe haven, bad news often has positive effect on the value of the currency, as investor concern means safe havens are favoured. The result for this bad news, the Swiss gained half a cent against sterling.
Next we had German GDP which also came in under forecast, while unemployment was as expected. The EU money supply and private loans data missed the mark. Consumer confidence, services sentiment and economic sentiment posted higher than expected, although German inflation figures were all lower than forecasts. These mixed data releases for Europe and the lack of anything for the UK meant trading levels were very much up and down as each release came out, but in a fairly low range of around 30 points, with sterling struggling to break through key resistance levels on the upside. Against the US dollar the euro was much more clear cut, losing half a cent over the morning.
During afternoon trade, US data was a mixed bag which actually had an adverse effect on the value of the dollar. As with the Swiss currency, the US dollar is low yielding, so favoured by investors when data is poor, especially from the world’s largest economy, the USA. So when data beats expectations in America, investors sell the dollar in favour of higher yield currencies, like the pound, hence a three quarter gain for sterling, back up to the multi year highs we’ve touch recently.
So back to today and to close the month we have Gfk consumer confidence for the UK, Nationwide house price data. Bank of England governor Mark Carney will give a speech to close the day at 3.30pm. German retail sales, EU and Italian inflation figures along with EU unemployment before lunch, with US and Canadian GDP figures, US inflation figures and finally a Fed member speech in the afternoon. Plenty to move the markets for better or worse so keep those mobiles on so your CI broker can keep you informed!
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