Missed Opportunities

28 June, 2013

Paul Newfield

Yesterday saw large swathes of data released, that had the potential to send the GBP/EUR rate to far and above the highest peak we’ve seen in over a month. (1.19 anyone?) The reality, however, was that positive German unemployment data – with 12K more working, along with diabolical British GDP (in at half the expectation at 0.3% YoY), our nation’s current account – further into arrears by a cool £2.7bn, now standing at £14.5bn, caused the Euro rate (against the Pound) to drop faster than the proverbial lead balloon.

The most rotten of cherries to top the cake of mishap was that total business development investment has apparently dropped, a quite frankly shocking amount -16% (excellent news if you are bringing back Euros to good ol’ Blighty by the way). This quattro of data wiped a half cent off what you would achieve for the equivalent in Sterling. But hold on folks, more damage to the Pound occurred throughout the day – positive Euro sentiment, not for the first time (although heavens know why) strengthened the Euro, coupled with bullish industrial confidence throughout the continent caused further losses to the Pound.

By lunchtime, the USD entered the fray (unfortunately it was flight rather than fight) further weakening the pound and strengthening the Euro. Worsening unemployment levels stateside tipped the USD/EUR see-saw in Europe’s favour. GBP had lost almost a cent against the Euro before some positive data from the US (hawkish personal income, pending home sales and gas storage) and market correction due to sentiment and structural resistance caused GBP/EUR to settle at around 1.17, mid-market. All in all, the Pound lost a cent against both the Euro and the US Dollar.

This morning has already seen Nationwide housing prices YoY came in worse than expected, although an improvement on the previous – 1.9% up from 1.1% although under the consensus of 2.0% In the Euro zone, German retail sales came in poorly (YoY), a drop of 2.3% but MoM came in higher than expected at 0.8%.

Later today sees data releases with regards to European countries CPI results, retail sales and Canadian GDP figures.

Volatility simply isn’t an accurate and powerful word for what is happening in the markets at the moment, so to get the best possible “inside knowledge” from our industry leading experts, get in touch with us at Currency Index!