Currency Market News 140313

14 March, 2013

Simon Eastman

As Pope Francis begins a new era in the Vatican, there seems to be little white smoke where sterling is concerned. Yesterday was a quiet day for UK data with no releases of note, so the direction of the pound was guided from releases elsewhere.

Sterling had managed to make some ground, which started from about 2pm on Tuesday and seemingly continued overnight, as we came into the pound up against the Euro and US dollar, along with a basket of other currencies. The trend against the single currency was able to continue, only due to some euro weakness as a raft of Eurozone data came out worse or as expected, including EU industrial production which forecast to be -0.1% actually dropped to -0.4%, mirroring the weakness the pound drew off a similar negative result on Tuesday. Against most other currencies, like the US, Aussie and Kiwi dollars the gains made overnight were limited and towards the end of the day, started to reverse.

This morning we come in to a broadly flat pound, with the pound up slightly against only the Euro, but starting to trend down. It seems with the pressure coming from possible QE and the fears over a triple dip recession, any gains by sterling will be capped, which is exactly what we saw yesterday. The black smoke is likely to continue billowing from the Bank of England for some time, as we wait to digest March’s BoE minutes due next Wednesday, the Chancellor’s budget next Tuesday and further off, next month’s Q1 2013 GDP figure. Until then, expect a rocky road for sterling with plenty of potential potholes, like retail sales and inflation figures.

Today sees employment data and the ECB monthly report from the Eurozone along with inflation figures from across the pond, followed on Friday by further inflationary figures in the EU and US. So, with much on the horizon to cause volatility, contact one of the brokers here at Currency Index for some friendly guidance on your upcoming transfer.