News

Double blow for UK plc

28 July, 2011

CurrencyIndex

The UK economy – and therefore sterling – has suffered a double blow today, as the CBI lowered its growth forecasts for the year to just 1.8%, and the trade gap widened to a new record high of £9.2bn in December.

With the Bank of England unlikely to move interest rates tomorrow, based on the fragility of the recovery, there does not seem to be any good news for the Pound, which has dropped 0.6c against the Euro during the course of today.

This week’s economic news

28 July, 2011

CurrencyIndex

Although we do not expect any major news such as an interest rate change from the Bank of England this week, there is plenty of data out in the UK and Eurozone which is likely to have an effect on exchange rates. With rates for buying Euros and Dollars currently enjoying some improvement, make sure you don’t miss out on any opportunities to buy this week.

Contact us at Currency Index for the latest news and live trading rates.

Monday 7th
0030 – Australian retail sales (December)
0930 – Eurozone investor confidence
1100 – German factory orders (December)
2000 – US consumer credit (December)

Tuesday 8th
Overnight – UK BRC retail sales & RICS house price balance
0500 – German retail sales (December)
0645 – Swiss unemployment rate
2330 – Australian consumer confidence

Wednesday 9th
0700 – German trade balance (December)
0930 – UK trade balance (December)
1500 – Speech – US Federal Reserve chariman Bernanke

Thursday 10th
0030 – Australian unemployment rate
0500 – UK GDP estimate (NIESR)
0900 – European Central Bank monthly report
0930 – UK industrial & manufacturing production (December)
1200 – UK interest rate decision
2230 – Speech – Australian RBA governor Stevens

Friday 11th
0700 – German CPI inflation
0930 – UK PPI inflation
1330 – US trade balance (December)
1730 – Speech – European Cental Bank president Trichet

Sterling given lift by services sector

28 July, 2011

CurrencyIndex

The Pound has enjoyed a strong start to the week, with this morning’s PMI Services figures showing a pleasing return to growth in January.

Added to yesterday’s industrial figures, the gloom left by last week’s disappointing GDP figures has been somewhat lifted.

The Pound is now at its best level against the US Dollar for 3 months, and is also up against the Euro, which has been hit by the yesterday’s downgrading of Ireland’s credit rating.

Manufacturing sector boosts Pound

28 July, 2011

CurrencyIndex

This morning’s manufacturing inflation data showed activity grew at its fastest pace since 1992 in January – and manufacturing employment also rose at its quickest pace since records began.

Higher manufacturing inflation will theoretically lead to consumer inflation increasing – and therefore increase pressure on the Bank of England to increase interest rates which would be likely to increase the value of sterling.

The Pound rose to its best level against the US Dollar for 11 weeks on the release of the news, and is also up against the Euro.

The moves come despite depressing mortgage approvals and house price data also announced today.

News releases this week

28 July, 2011

CurrencyIndex

This week we have the following news releases scheduled, all of which are potential influences on exchange rates. Contact us at Currency Index for the latest opinions & live trading rates for your own transaction.

Monday 31st
0700 – German retail sales (December)
1330 – Canadian GDP (November); US personal income & expenditure (December)
2230 – Australian manufacturing index

Tuesday 1st
0330 – Australian interest rate decision
0700 – UK house prices (Nationwide)
0900 – German unemployment rate
0930 – UK mortgage approvals (December) & money supply
1000 – Eurozone unemployment rate

Wednesday 2nd
1000 – Eurozone PPI inflation (December)
2145 – New Zealand unemployment rate

Thursday 3rd
1000 – Eurozone retail sales (December)
1245 – Eurozone interest rate decision

Friday 4th
0500 – UK house prices (Halifax)
1200 – Canadian unemployment rate
1330 – US unemployment rate & non-farm payrolls

Biggest drop in confidence since 1992

28 July, 2011

CurrencyIndex

This morning’s UK consumer confidence survey has shown its biggest fall since 1992.

Consumers are increasingly expecting a painful 2011, both in their own financial circumstances and the economy overall. With VAT up to 20% and negative growth, talk of a double-dip recession is increasing.

This is all bad news for sterling, which is continuing to fall. Unless the Bank of England decides to raise interest rates soon (which seems very unlikely), the Pound could be in for a negative period ahead.

To avoid the risk of falling currency rates making your own overseas purchase more expensive, remember you can fix and guarantee your exchange rate up to 2 years ahead with Currency Index.

Bank of England did consider interest rate rise

28 July, 2011

CurrencyIndex

This morning’s Bank of England minutes showed that the MPC did consider an interest rate rise in January – and the Pound has recovered slightly this morning as a result.

For the first time since rates were slashed to 0.5%, 2 of the 9 members voted for a 0.25% hike in rates. Higher interest rates would be likely to increase the value of sterling, and therefore improve exchange rates for sending money abroad.

However, the decision was made before yesterday’s disastrous GDP figures were announced, and Mervyn King’s speech last night suggested that rate rises may be off the agenda until the economy returns to stable growth.

For further review of the Bank’s minutes, click here.

Disastrous GDP sends sterling lower

28 July, 2011

CurrencyIndex

The first estimate of GDP for Q4 2010 shows the UK economy shrank by 0.5% – much worse than analysts’ expectations of a 0.5% growth figure.

The Pound has fallen a cent against both the Euro and US Dollar this morning.

Mervyn King’s speech this evening is unlikely to help, with many observers thinking that the Bank of England will not raise interest rates for some time to come, so sterling does not look likely to have any support in the short term.

This week’s currency news 93

28 July, 2011

CurrencyIndex

This week’s main UK data releases are GDP (Tuesday 0930), Mervyn King’s speech (Tuesday 1940) and Wednesday’s Bank of England minutes (Wednesday 0930).

The Pound is vulnerable to any negative news, so any indications from the Bank of England that interest rates are not likely to be increasing in the short term, could bring exchange rates lower this week.

Monday 24th
No major data

Tuesday 25th
0030 – Australian CPI inflation
0700 – German business confidence
0930 – UK GDP (Q4 2010) and public borrowing (Dec)
1200 – Canadian CPI inflation
1500 – US consumer confidence
1940 – Speech: Bank of England governer Mervyn King

Wednesday 26th
0930 – Bank of England minutes
1915 – US interest rate decision
2000 – New Zealand interest rate decision

Thursday 27th
1000 – Eurozone consumer confidence
1330 – US jobless claims

Friday 28th
1330 – US GDP

Retail sales & mortgage approvals down

28 July, 2011

CurrencyIndex

Sterling has been held back today by poor retail sales and mortgage figures in the UK, which showed:

– Only 40,000 new mortgages were approved in November
– Retail sales fell 0.8% in December, and were flat for the year

Analysts were hoping for a slight rise in retail sales, given the Christmas period, and for around 20% more mortgage approvals – both of which would have been indicators of better recovery in the UK economy.

With the sterling-euro rate falling away, aiming for rates of 1.20 may now not be realistic for some time to come.