The table below shows the percentage movement of exchange rates yesterday, along with the extra currency you could have bought if buying with £200,000.
|Currency Pair||% Change||Difference on £200,000|
- GBP after Mixed Data
- Euro Weakness After Spain Package
- Australian & US Dollars
GBP after Mixed Data
The pound made great gains against the Euro but took losses against most other currencies following UK data released yesterday. Both Industrial and manufacturing production figures came in better than expected although it probably had more to do with the longer month, with the end of May bank holiday rolling into June for the Queens Jubilee. The flip side is that the figures for June (to be released next month) are likely to be worse than usual (having lost two working days in June) and there could be a nasty surprise waiting. Retails sales numbers from the British Retail Consortium pointed to growing sales in June but below forecast and most likely down to wet weather even with the Jubilee. With weak GDP expected to continue it would seem the UK will most likely stay in recession. Although rates for GBP EUR are particularly favourable now, and hovering around that 4 year high, another quarter of recession is likely to hinder sterling substantially and a slide could easily follow at some point soon pushing rates back down to the 1.22 / 1.23 levels. Be sure to take advantage of these upper levels whilst they are available now.
Euro Weakness after Spain Package
The Euro took sizeable losses yesterday despite a positive show from EU leaders, having given Spain an extra year to reach its targets and trying to get aid to Spanish banks. Normally this would be Euro positive but on this occasion the markets seemed disappointed that more was not being done. At the same time focus is moving towards the German court hearing. So what’s the hearing all about? The issue is to do with the European Stability Mechanism (ESM) and whether the new bailout funds and rules are compatible with national law. The case is expected to take weeks rather than days and may create a lot of red tape within the EU, to the extreme scenario it may prevent funds from becoming available to combat the crisis and hence this is a risk for the Euro. This is going to be topical and so expect volatility on the back of it this week.
Australian & US Dollars
Data from China yesterday showed that imports rose much less than expected. Forecast was for growth of 12.7% but the numbers were well of the mark at just 6.3% and hence the concern that world economic growth is stuttering. The Australian economy, being a major exporter to China, could be one of the big losers here and the dollar could see some wobbles going forward especially if more soft data from China follows. Although home loans in Australia came in a little softer this morning the much better than expected consumer confidence figures more than made up for it and the dollar is likely to see some short term strength off the back of it.
Mortgage applications and US Trade balance figures released this afternoon are expected to show a small improvement. This evening sees the Federal Open market Committee (FOMC) minutes from the last meeting where we should find more clues on where US policy is heading – More QE? With all the latest news in the Eurozone the dollar may have a little further to go in terms of safe haven status and we could see GBP slide lower to 1.52/1.53.
With no UK economic data releases then focus will be on Euro and US data starting with German Consumer Price Index (CPI) for June this morning. The main focus however is on the Euro stories which do have further to go and should create some market movement. Fresh austerity cuts are also expected from Spain this morning which should create volatility let alone more civil unrest. To discuss how these issues may affect your requirement call us on 0800 328 5884 or 01494 725 353 or e-mail me directly email@example.com