The EUR/USD/GBP plot thickens

30 October, 2013

Paul Newfield

As the weather and transport connections in Great Britain got back to a relative state of normality yesterday, the same could not be said of the UK data that was released at 9:30am. As we have seen for several weeks now, UK figures have shaped up nicely on the whole, although the US debt crisis has caused investors to shift allegiances to the single currency of the Euro zone, which has strengthened the much-maligned European tender against both the Dollar and more importantly for us, Pound Sterling. The Pounds initial minor slip, due to the aforementioned problems in the US, was confounded when yesterday morning the Bank of England’s announcement that net lending to individuals was an astonishing £1.1bn less than the expected level of £2.5bn, giving us an insight into the minds of Britons at the moment; that we simply aren’t wanting to spend, or at least borrow to spend, as much as we previously have done with figures for consumer credit also down on last months’ release. There was, however, some positive news in the UK – we were pleased to hear that mortgage approvals has again been at higher than expected levels. Strangely enough, despite the flow of negative overall data, the Pound jumped slightly, peaked and then descended throughout the rest of the day by half a cent against the Euro at close of trading. A couple of factors were involved in conspiring to bring about the fall of the Pound – most of the form can be attributed to the raft of negative American releases, a currently ongoing story, with the old USD-EUR see-saw slumping down in favour of the single currency still further. The main headline statistics of the day from the US include inflation figures (PPIs) down on the last twelve months. Retail sales State-side, were disappointing, almost certainly due, at least in part to the US shut down, whilst consumer confidence has also taken a nose dive, way down on the previous result and under expectation for this month, also. The only other news of note was the Bank of Canada’s Deputy Governor Agathe Coté’s speech in which she declared that commodity prices may not rise as much as previous years and should “therefore not be relied upon for future growth” As for today, our Currency Index Market Report does a bit of globe-trotting with a whole host of data releases from all four corners of the globe, with absolutely zilch from the UK, so we will be looking on with interest as to how the Euro, the US Dollar and indeed the Pound, are affected. To kick things off, this morning, we have German unemployment rate and change figures, followed by European sentiment and confidence values, after which is hugely important data from the USA and Germany, the vast majority of which are national inflation figures, that could well define how the currencies match up against each other throughout the rest of the day and may give us a brief glimpse into how things will shape up for the rest of the week. Will investors switch back again from EURO to Dollar? We may know more after Federal announcements of the interest rate decision, the latest from the US quantitative easing programs and its monetary policy statement. Tomorrow we will have inflation data from the Euro-zone, retail sales releases from Germany, Nationwide house prices from the UK, Jobless claims from the US and finally GDP from Canada So lots to take in and reflect on – be sure to stay in touch with us for any upcoming overseas payments that you may wish to make imminently or in the future; the rates WILL move, potentially by significant amounts.