End of month currency report
1 June, 2012
The end of the month was another day led by investor sentiment as fears over Spain and their banking system again took precedent over sterling’s trading direction.
Against the Euro the pound had a fairly quiet day, moving up and down in a fairly small range at similar levels we have been at all week, only dropping towards the end of the day mainly due to month end profit taking by traders. Against the US dollar, the Pound continued to fall as investors carried on buying up the safe haven currency as fears Spain may need outside aid to help sure up their banking system increased. The pound to dollar exchange rates fell 0.6% reaching fresh 4 month lows during trading.
As the new month starts today, the pound will be led by events elsewhere with additional pressure from whether the Bank of England will announce further QE when they meet for the monthly policy meeting next week, with one of the members Charlie Bean, commenting yesterday “there was more scope for asset purchase”.
This, as regular readers will know, is likely to weigh on sterling and cause some weakness if we have another cash injection into the economy. There is also the outside chance the BoE may follow the advice of the IMF and cut out interest rate from the current 0.5%, again, another accelerant for a weak pound.
Today we have a raft of data including from the UK, Halifax house price index and the Purchase Managers Index (PMI). In the Eurozone there is PMI from Germany and the EU unemployment rate figures, whilst across the pond in Canada we get GDP readings and in the US the all important Non-Farm Payroll along with Average Earnings, Personal Income, Personal Expenditure Price Indices, Unemployment and Construction Spending data.
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