European Central Bank and Bank of England jousting with EUR/GBP rate.
6 September, 2013
Whilst many were outside yesterday enjoying the last scorcher of the year, it was inside the ECB and the BoE where the heat level has been notched up to “scorch”. The Pound hit 4 month highs against the single currency of the Euro zone, largely due to little major Euro data being released, barring German factory orders that came in under par and news from Spain that the total of jobless has also remained stable. All in all the Sterling rose three quarters of a cent against theEuro over the course of the day.
In good old Blighty, the BoE chose, yet again, to leave interest rates as previous, at 0.5%. However, with UK borrowing costs at a two-year high, at over 3% for the first time since July ’11 there are market doubts about whether Mark Carney, the new Bank of England governor, will be able to keep the lid on interest rates until 2016. Pushing the Pound still further was the OECD upgrade of their UK growth forecast from 0.8% previously to almost double at 1.5%, aided no doubt by survey results, indicating that the UK construction sector grew at its fastest pace for nearly six years – a similar survey earlier in the week showed a similar story for the manufacturing sector also.
At lunchtime our focus switched to Mario Draghi’s speech to the world where he declared that interest rates would remain, like those of the UK, at 0.5% and that he was very cautious on economic recovery of the Euro and that interest rates will, in the future, be cut further or, failing that, even more funds will be pumped into the economy. At this point $-€ hit a 6 week high after Draghi’s less than optimistic comments, facilitated by Euro-zone growth being downgraded from 1.1% to 1.0%. The Dollar remains high today as it awaits US job reports…
As for today, well, we have already had word from Halifax that UK house prices have risen at fastest annual rate since 2010, whilst at the Russian G20 summit the irrepressible Putin has opined that a return to world wide economic downturn cannot be ruled out – now, there’s some extra “Friday feeling” for you all! Although you may feel better knowing that the BRICS nations have put aside a $100 billion fund for a “rainy day”
Also in the lineup for release today, are major data snippets for the UK, the US and Canada. The list includes:
Consumer inflation expectation figures, industrial and manufacturing data and goods trade balances (GBP)
Payroll and Unemployment (US & CAN)
Please stay in touch with your Currency Index trader and stay ahead of the markets…don’t get caught out by sudden movements when sending money abroad.
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