GBP/EUR rates hit the highest buying levels in over a year
22 January, 2014
Despite a quiet day on the data front the markets were particularly buoyant ahead of today’s key releases. The only data of any note yesterday was the ZEW Survey for economic sentiment for both the Euro-zone and for Germany. Whilst the figures were very positive and better than expected for the Euro-zone as a whole, the German sentiment had dropped and it was this negativity that was reflected in Euro exchange rates with pound the pound and the US Dollar gaining against the single currency.
The pound continued to rally yesterday as the IMF announced that they have upgraded the UK economic growth forecast to 2.4% for 2014, making it the fastest growing major economy within Europe. GBP/EUR rates hit the highest buying levels for over a year, and GBP/USD rates sit just 1 cent away from the same heights. Some of yesterday’s confidence will also be coming from the expectation of good UK unemployment figures this morning at 9:30am. Traders will likely be pricing in the analysts forecasts that the headline rate for UK unemployment could come down further this morning to 7.3%. If achieved then sterling could enjoy another positive day however with rates already at peak levels after a good run in the last month, we are particularly vulnerable to heavy losses if any of today’s figures fall short of expectations. At the same time as the unemployment figures the Bank of England will also release the latest minutes from January’s interest decision.
Elsewhere across the globe the Australian Dollar continues to weaken off with buying levels for GBP/AUD at their highest since September 2009 yesterday afternoon. Overnight the latest inflation figures were released for Australia with the Consumer price Index now sat at 2.7%, a 0.5% increase year on year. This is seen as very positive for the Aussie Dollar as higher inflation reduces the risk of any further rate cuts. Subsequently the pound has lost 2 cents since the early hours and this could potentially trigger a short term turning point in the gains experienced over the last 9 months.
For those with an interest in Canadian Dollars then their interest decision is this afternoon at 3pm however no change is expected to the current base rate.
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