Much ado about nothing

28 February, 2013

Matthew Boyle

Yesterday was set to be a particularly busy one for both the Pound and the Euro with UK GDP figures released early in the day and Mario Draghi speaking in the early evening. However it remained fairly stagnant – UK GDP came in on consensus -0.3% for Q4 of 2012 so much of this result will have been priced in to the markets, whilst we did show 0.2% growth for the year. This caused little in the way of movement despite the positive yearly figure, highlighting perhaps the great deal of work that may need to be done in order for the pound to regain the heavy losses already suffered this year.

Mario Draghi’s announcement later in the day signalled their would be a continuation of the ongoing stimulus package which added a degree of confidence to the single currency, seeing the European stocks rise and the Euro squeeze almost 0.5% against the pound. Similar news came from the US as Bernanke also reaffirmed commitment to financial stimulus until unemployment levels reduced, although this did little to greatly move USD rates – perhaps it is now reaching a plateau given its recent rapid gains? The USD is now at 2.5 year highs against the pound so are we seeing resistance to any further strengthening?

Today is a fairly busy day of releases for Europe so it will perhaps be a day of more movement. Spanish GDP and German unemployment have already been released this morning and both have come in under consensus which has seen the pound gain half a cent against the single currency. With Consumer Price Index for both Germany and the Euro zone later it will be an interesting afternoon for the GBP/EUR cross. Later we also have US GDP figures which will interesting given the ongoing battle between the three majors and following yesterdays stimulus announcement from Bernanke.

Inevitably the ongoing struggle between the Pound, Euro, and Dollar will continue to play out for some time, but certainly at the moment the markets are reacting with extra vigour and often data which usually would not move the markets is having a increased effect.

With this in mind should you have any upcoming transfers to make please ensure you speak to your Currency Index broker. In what is an ever-increasingly volatile time, it is even more important to try and stay ahead of the currently stormy markets.